Hospital consolidation has been on the rise in recent years as providers seek to improve quality, meet meaningful use criteria for information technology and surpass other challenges.
Although provider integration can lead to more efficient, higher quality care delivery, it also could potentially increase hospitals' market power and their ability to raise prices, according to a Commonwealth Fund-supported study published in Health Affairs. In the study, the researchers identified the following eight strategies to promote greater competition and prevent consolidation-driven price growth.
1. Direct payment rate regulation. Rate-setting policies could slow aggregate spending in states with the highest provider market concentration, according to the study.
2. Assessing quality and efficiency with claims data. Access to claims data from Medicare and private health insurers would make it possible to evaluate providers' performance concerning quality and cost.
3. Limited/narrow networks. Health insurers can steer consumers away from high-price providers with narrow networks.
4. Increased price and quality transparency. Many health insurers are already developing transparency tools that estimate patients' out-of-pocket costs, as well as providing quality information. This allows patients to become more price-conscious when making care decisions.
5. Point-of-service incentives. Hospitals could be assigned to different cost-sharing tiers for different service lines. Alternately, a reasonable price could be set for each healthcare service, and patients who choose providers that charge more than that price could be held responsible for paying the difference.
6. Development of physician organizations. Physician organizations can provide competition for hospital-led accountable care organizations, if they assume risk and contract directly with insurers, according to the study.
7. Limited provider consolidation. The Federal Trade Commission can keep hospital consolidation in check through antitrust enforcement.
8. Limited charges for out-of-network care. Some state governments have limited hospital and physician charges for circumstances such as emergency care in which patients are unlikely to be able to choose providers.
More Articles on Healthcare Consolidation:
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Key Issues in Mergers and Acquisitions: Is Ownership a Downward Trend?
10 Steps for a Successful Merger/Acquisition