Large employers don't have enough power to negotiate hospital prices, study says

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Self-insured employers face low market power, stripping them of their ability to negotiate for lower prices with providers, according to a study. 

Published July 13 in the American Journal of Managed Care, the study drew a line between hospital price negotiating power and employer market power. 

Studying at the metropolitan statistical area level, researchers found that while greater market power does not necessarily result in lower negotiated prices, self-insured employers are stuck trying to utilize centers of excellence, incentivizing in-network care and encouraging generic drug usage. Even with these efforts, hospitals hold the cards in what they charge, the study said.

The study offered two options to gain some power at the table: leverage employer coalitions to pool employees or work with local government on purchasing alliances. 

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