Back in March of last year, I wrote a piece about the consolidation of US hospitals leading to higher costs and the reduction of quality.
In that article, I provided the reader with a chart of the changes in hospital consolidation in the US by region, and referred to an article on Payerfusion.com that stated that hospital spending is the key driver of healthcare costs in the US and has been growing at nearly 5% year over year.
In today’s Wall Street Journal, Suzanne Delbanco, executive director of Catalyst for Payment Reform, wrote an Opinion article further expounding on the issue of hospital consolidation and its impact on health care costs.
According to Dr. Delbanco, nationwide, payments to hospitals on behalf of the privately insured are an estimated 3% higher as a result of consolidation, according to a report by her organization.
She states that in some cases, hospitals have increased their prices by nearly 50% after a merger, and mentioned that when two San Francisco area hospitals merged, their prices increased 28%-44%, according to an analysis by an FTC economist.
For employers, who pay about 60% of the total cost of an employee’s health care, this meant that they were burdened with higher costs, as well as consumers, who also saw their portion of the bill go up.
As long as there is an urge to merge, as long as hospitals and hospital systems consolidate, health care costs for privately insured individuals, insurance companies, employers, and consumers will continue to rise.
For the purpose of this blog, employers who must deal with group health insurance costs, as well as workers’ comp costs, need to decide if they are going to continue to be played as fools and allow hospitals to get away with ever increasing costs. That brings to mind the line in the original Star Wars movie, where Obi-Wan says to Han Solo: “Who’s the more foolish? The fool, or the fool who follows him?”
It does not have to be that way. There are alternatives to high cost medical care, and you would be foolish not to look into them.