Instead of justifying high prices, dominant providers should acknowledge them and actively work to bring them down through cost containment and care coordination efforts. As healthcare becomes more consumer-driven, due to increasing patient financial responsibility, it will be interesting to see if consumers agree with insurers that dominant players can’t be passed over. My guess is that a lower-cost provider that offers equivalent quality will win the consumers’ dollars. A narrow-network plan that provides significant savings with a little less access may look pretty attractive to cash-strapped consumers.
Of additional concern, as Paul Levy, former CEO of Beth Israel Deaconess Hospital in Boston, highlighted in his blog post on the study, is that current trends in consolidation are poised to make these dominant providers even more dominant (as they acquire other providers and gain market clout by doing so).
Levy cites a June article in the New York Times on healthcare consolidation:
“If there is one thing that economists know, it is that market concentration drives prices up — and quality and innovation down.”
While much of the healthcare system has looked to consolidation as a major factor in driving clinical integration — which many believe will help lower costs through better care coordination — economists may question the validity of that argument.
It will be fascinating to see how the forces of increased consolidation (which increases prices) and consumerism (which drives them down) will interact over the next few years.
More Posts From “The Daily Beat” Editors’ Blog:
To Err is Human, To Continually Not Protect Against it is Institutional Failure
Sequestration’s Impact on Healthcare Goes Way Beyond Medicare Reimbursement — Could a Cure for Cancer be on the Chopping Block?
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