- As some employers look to contract directly with hospitals in an effort to lower healthcare costs, researchers found that large self-insured employers likely do not have enough market power to extract lower prices, according to a study published in The American Journal of Managed Care.
- The study examined the relationship between employer market power and hospital prices every year between 2010 and 2016 in the nation’s 10 most concentrated labor markets.
- The study found that hospital market power far outweighs employer market power, suggesting employers will not be successful in lowering prices alone, but may want to consider forging purchase alliances with local government employee groups, the research paper said.
In recent years, some larger employers have cut out the middlemen to strike deals directly with hospitals.
Perhaps most notably, J.P. Morgan, Amazon and Berkshire Hathaway joined forces to bend the cost of care in the U.S. Despite all the fanfare, the venture, named Haven, later fell apart, illustrating how difficult it is to change the nation’s healthcare system.
By circumventing traditional health insurers, companies are hoping they themselves can negotiate better deals.
But this latest study throws cold water on that strategy, at least in part. “Our study suggests that almost all employers, operating alone, simply do not have the market power to impose a threat of effective negotiation,” the paper found.
One of the paper’s main aims is to measure market power of hospitals and employers, and the results are striking. The average hospital market power far exceeds that of the employer in the 10 metropolitan areas researchers examined.
The average hospital market power was more than 80 times greater than that of the employer, putting into context just how askew the power dynamics are.
These employers are not wrong for wanting to strike out on their own, the researchers point out.
Many self-insured employers bear the insurance risk while entering into administrative services only arrangements with insurers which provide just that, administrative type services.
But insurers in these arrangements may not have any incentive to lower prices. The paper pointed to another working research paper that found ASO plans pay more for the same service, at the same hospital compared to those in fully insured arrangements.
“The empirical evidence suggests that insurers, because they lack the incentive, may not be negotiating lower prices for their ASO enrollees,” according to the study.
Even though employers may not have enough market power on their own, researchers offered up a solution: team up with state or local government employee groups to increase market power to obtain lower hospital prices.
El Camino Health severed ties with Anthem after pricing disputes forced the provider to kill its contract, making it the most recent in a cast of Bay Area systems to have troubles with the insurer, according to the Mountain View Voice.
Over the past decade, four systems, including Mountain View, Calif.-based El Camino, have had contract struggles with Anthem related to claims that the insurer is penny-pinching.
The result is a standoff, as Anthem has claimed in the past that regional healthcare costs are too high, explaining low service payment offers.
While Anthem provided annual payment increases, the rate El Camino requested would raise premiums and copays for businesses and families, the insurer told the Mountain View Voice. El Camino said Anthem’s terms are “well below” that of other insurers.
El Camino and Anthem are still negotiating, which could last up to between three and six months based on previous conflicts. Meanwhile, El Camino patients without critical healthcare needs are no longer in-network with Anthem.
Health insurer Humana quietly funded 40 of Iora Health’s 47 primary care clinics, according to a Securities and Exchange Commission registration statement obtained by Business Insider.
The filing also showed the Humana-funded clinics exclusively served Humana members until July 2020.
Humana CEO Bruce Broussard told Business Insider earlier this year that the company had begun investing in other startup healthcare companies to see which would succeed. He also said the payer sees better outcomes and lower costs among members who go to clinics focused on providing care to older populations.
Iora Health serves 38,000 patients in eight states, according to the article.
During Pride Month we feel it’s especially important to shine a light on the significant health disparities faced by transgender and gender-nonconforming individuals.
Transgender healthcare has been under growing attack in recent months; while the Biden administration formally reinstated Affordable Care Act protections for transgender Americans against discrimination in healthcare, 20 states have introduced anti-trans bills since the start of the year, most featuring provisions that bar physicians from providing trans children with gender-affirming care.
The graphic above shows that transgender individuals are twice as likely as the broader LGBTQ+ population to delay care for fear of discrimination. Trans individuals deal with myriad types of medical discrimination, from being misgendered in routine interactions to being denied treatment. And trans people of color report experiencing this mistreatment even more frequently. Transgender people are also more likely to be uninsured or to delay care for financial reasons, in part because their unemployment and uninsured rates are higher than the national average. Even when they do find supportive providers, nearly 40 percent report that their insurance will not cover essential elements of transitional care, such as hormone therapy.
It’s incumbent on doctors and health systems to strengthen their policies for treating trans individuals. Trans-specific training for clinicians and staff is a great place to start. Even simple shifts in operations—like including preferred name and pronouns on patient records and providing equal access to public restrooms—are small but important steps to providing a safer, more inclusive healthcare experience and reducing transgender health disparities.