Many of the largest hospital providers use their negotiating clout to obtain high rates from commercial health insurers, and because this trend has grown in recent years, researchers argued in a recent Health Affairs article that market and regulatory approaches should be considered to keep negotiations from hiking healthcare costs.
In October 2010, researchers interviewed 539 hospital and healthcare leaders in 12 different metropolitan communities. Other "market observers," such as healthcare consultants and local university faculty, were also asked about the dynamics of contract negotiations and payment methods.
After transcribing those interviews into databases, researchers identified an overall trend in which hospitals had the upper-hand in negotiations. "In most markets, so-called must-have hospitals have long had negotiating leverage over health plans," according to the article, referring to hospital systems that must be included in health plan networks to attract employers and consumers.
The study's authors, who are part of the Center for Studying Health System Change, the Medicare Payment Advisory Commission and the University of Minnesota School of Public Health, concluded consolidation is a major factor in the growing leverage of hospitals and physician groups in negotiations with commercial payors. The authors also said regulations on hospital providers should be examined — in addition to regulations of commercial insurer premium rate increases — to "address the consequences of growing provider leverage."
In October 2010, researchers interviewed 539 hospital and healthcare leaders in 12 different metropolitan communities. Other "market observers," such as healthcare consultants and local university faculty, were also asked about the dynamics of contract negotiations and payment methods.
After transcribing those interviews into databases, researchers identified an overall trend in which hospitals had the upper-hand in negotiations. "In most markets, so-called must-have hospitals have long had negotiating leverage over health plans," according to the article, referring to hospital systems that must be included in health plan networks to attract employers and consumers.
The study's authors, who are part of the Center for Studying Health System Change, the Medicare Payment Advisory Commission and the University of Minnesota School of Public Health, concluded consolidation is a major factor in the growing leverage of hospitals and physician groups in negotiations with commercial payors. The authors also said regulations on hospital providers should be examined — in addition to regulations of commercial insurer premium rate increases — to "address the consequences of growing provider leverage."
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