The liberation of long-hidden data on what private insurers pay for medical services may increasingly put providers in an unflattering light as they bulk up through mergers and acquisitions.
Health policy researchers have generally turned to Medicare to study variations on healthcare spending in the absence of price data from private insurers, and their conclusions focused on the volume and intensity of services rendered.
But commercial health plans that cover workplace benefits for millions of Americans pay higher prices to hospitals that have little or no competition, according to a study that raises questions about how to slow U.S. health spending amid a wave of consolidation.
In a study published by the National Bureau of Economic Research, researchers analyzed health spending across multiple U.S. markets and compared the numbers for Medicare with claims data for 88 million patients with employer-sponsored health insurance.
Private insurance prices were 15% higher when hospitals had no competition compared with markets with at least four hospitals. That amounts to a difference of about $2,000 per admission, said Martin Gaynor, one of the researchers and former director of the Federal Trade Commission's Bureau of Economics.
“Prices have a lot to do with spending, and a lot of what's driving price is the difference in the competitive market,” Gaynor said.
The findings are significant as hospitals across the country continue a deal binge that has consolidated markets and created regional giants.
Leaders of the merging hospitals and systems routinely say the strategy is necessary to meet changes in federal policy that create a financial incentive for hospitals to control more of the market. State and federal antitrust enforcers have argued otherwise. The Federal Trade Commission has moved to block three hospital deals in the past two months, including a challenge announced Friday seeking to derail the merger of Advocate Health Care and NorthShore University Health System in Illinois.