Hospital mergers may thwart reform goals
The recent trend toward hospital consolidation would seem to work at cross purposes with health insurance reform's central mission of seeding the private health care market with incentives that will blossom into better care at a lower cost. After all, studies have shown that when hospitals merge, just the opposite happens: Prices go up, and quality can falter.
According to the American Hospital Association, more than 600 hospitals have been acquired since 2007. A similar spike in mergers and acquisitions followed the rise of health maintenance organizations, or HMOs, in the mid-1990s.
"If you have more and more consolidation of providers (hospitals), it makes it more difficult for insurers to be tough price negotiators," says Blumberg.
"Even if an insurer has 80 percent of a market, if they're dealing with a single must-have provider system in a particular area, that provider could say, 'You can tell me what you're going to pay me all you want, but here's what I'm going to accept.'"
Short of regulating prices, which is currently a political nonstarter, Blumberg says hospital consolidation "is an issue we're going to continue to struggle with."