Consolidation of US Hospitals Lead to Higher Costs and Reduces Quality

Image

I noticed a discussion today on one of my LinkedIn discussion groups, Regional Third Party Administrators. The discussion was from another blog on Payerfusion.com.

The blog stated that hospital spending is the key driver of healthcare costs in the US and has been growing at nearly 5% year over year. One cause of this consistent increase in spending is the continuing consolidation of hospitals around the country.

This increase in consolidation, the blog goes on to say, has given some merged hospital systems oligopoly power to impose fees that are far higher than those found in areas with high market competition.  Statistics show that hospital consolidation in highly concentrated markets have driven prices up by as much as 40%.

Because they have increased market power and leverage, hospitals charge private payers higher prices and are more successful in “cost-shifting” as a result of providing underfunded care. Studies show that stand-alone and community hospitals typically receive payments from private payers which are closer to Medicare/Medicaid fees.

Some of the impacts to cost and quality are as follows:

  1. Increases the price of hospital care.
    Increases in price due to hospital consolidation are largely passed onto consumers through higher premiums, higher deductibles/co-pays and even lower wages.
  2. Reduces quality of care, through decreased market competition.
    The focus of hospital consolidation is on reducing competition to increase market bargaining power when dealing with insurers. This reduction in competition also has an impact on quality and patient choice. Consolidated hospital systems may be less motivated to offer innovative, efficient methods and improvements to care quality in order to attract new patients.
  3. Consolidation hasn’t lead to lower costs or improved quality.
    Integration of merged hospitals may lead to enhanced performance through achieving efficiencies, greater coordination and revising processes to unify entities. Consolidation alone only combines multiple entities under one group to increase market power, not necessarily fusing them together for improvement.

What this means to the medical tourism industry, the workers’ compensation industry and to the overall health of the American health care system is this; it will mean a boon for medical tourism, and and a nightmare for the workers’ compensation industry if they don’t consider implementing medical tourism into workers’ compensation and realize real cost savings with better quality of care for their insureds’ injured workers.

Advertisements
This entry was posted in Health Care, Health Care Costs, Health Care Reform, Medical Tourism, Quality, Workers' Compensation and tagged , , , , , , , , on by .

About Transforming Workers' Comp

Have worked in the Insurance and Risk Management industry for more than thirty years in New York, Florida and Texas in the Claims and Risk Management spheres, primarily in Workers’ Compensation Claims, Auto No-Fault and Property & Casualty Claims Administration and Claims Management. Have experience in Risk and Insurance Business Analysis, Risk Management Information Systems, and Insurance Data Processing and Data Management. Received my Master’s in Health Administration (MHA) degree from Florida Atlantic University in Boca Raton, Florida in December 2011. Received my Master of Arts (MA) degree in American History from New York University, and received my Bachelor of Arts (BA) degree in Liberal Arts (Political Science/History/Social Sciences) from SUNY Brockport. I have studied World History, Global Politics, and have a strong interest in the future of human civilization in all aspects; economic, political and social. I am looking for new opportunities that will utilize my previous experience and MHA degree. I am available for speaking engagements and am willing to travel. LinkedIn Profile: http://www.linkedin.com/in/richardkrasner Resume: https://www.box.com/s/z8rxcks6ix41m3ocvvep

3 thoughts on “Consolidation of US Hospitals Lead to Higher Costs and Reduces Quality

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s