Washington D.C. (PRWEB) November 29, 2012
Escalating hospital consolidation is leading to higher prices for services, and its impact is being felt by consumers and employers who are footing the bill, according to an amicus brief filed by America’s Health Insurance Plans (AHIP) in the Court of Appeals for the Sixth Circuit in support of the Federal Trade Commission (FTC).
The FTC challenged the merger of two hospital providers in Toledo, OH, asserting that it would violate antitrust law, reducing the number of competing hospital providers in the area from 4 to 3, and further consolidating an already concentrated market. Following several proceedings and a determination by the FTC that the merger would violate antitrust law, the hospitals appealed to the United States Court of Appeals for the Sixth Circuit.
"Experience demonstrates that hospital consolidation results in higher prices for medical services and higher health care costs for consumers and employers,” said AHIP President and CEO Karen Ignagni.
In filing its brief, AHIP underscores the FTC’s position that the merger is anticompetitive and runs contrary to the goal of providing high-quality, affordable health care to consumers. According to AHIP’s brief:
“Consumers have borne a tremendous cost from anticompetitive hospital mergers…A hospital transaction that eliminates competition between significant competitors increases the ability of those formerly competing hospitals to demand and obtain higher prices. Those increased prices are ultimately paid by consumers, who also must bear the additional harm created by reduced incentives to improve quality.”
Data show that rising health care costs are being driven largely by higher prices for medical services. Hospital prices, which represent the largest contributor to premium increases, are “estimated to rise more than 8% in 2013—more than any other sector of health care spending,” according to an article in the Journal of the American Medical Association.
Increased consolidation gives hospitals greater negotiating strength by limiting competition. Research shows that hospital systems with strong market influence can often negotiate higher rates for their services than they would otherwise receive:
In its brief, AHIP states that hospitals seeking to pursue the goals of health reform – higher quality, more efficient care – have many options without undertaking anticompetitive consolidation. Through the appropriate use of technology and care coordination measures with partners, hospitals can address health care quality and cost without the harmful effects of anticompetitive consolidation.
“Indeed, it is quite likely that such consolidation would have the opposite impact on such efforts. Just as anticompetitive consolidation has been recognized to have a chilling effect on innovation in many other markets, such consolidation among hospitals is likely to reduce and perhaps foreclose innovative collaborations between plans and providers…This would be to the detriment of the consumers who have and will benefit from the improvements in quality and efficiency generated by these innovative collaborations.”
Controlling the rise in medical costs is essential to make health care coverage more affordable for consumers and employers. To learn more about health care affordability, visit http://www.AHIP.org/Affordability.
Vice President, Strategic Communications
America's Health Insurance Plans