Category Archives: realignment
February 13, 2015 | FAH Hospital Policy Blog Team
The Altarum Institute yesterday released its monthly Health Sector Economic Indicators Price Brief for February, which offers a year-on-year assessment of health care economics in 2013 and 2014. In particular, this report provides definitive proof of continuing slowed hospital care price growth and is a critical indicator of the reality of hospital realignment.
The headline of the Altarum Institute’s report notes that the growth rate of hospital prices is historically low:
“The big news for the month is the minimal hospital price growth—at 0.9%, the lowest rate since September 1998.”
The report also highlights the lowest price growth in Altarum’s records:
“Hospital prices for Medicare and Medicaid patients changed by -0.7% and 0.4%, respectively, down 1.4% from November for Medicare and up 0.5% for Medicaid. For other patients, price growth held steady in December at 2.0%. These three most recent readings…are the lowest since this series began in January 2002.”
The report concludes that the enduring trends of slowed—or in some cases negative—hospital price growth refutes long-standing misconceptions on hospital realignment, saying:
“This is remarkable, and for the time being, it should quiet those predicting higher prices emanating from hospital consolidation.”
This marks the second consecutive month Altarum has made this exact declaration to those who cling to the longstanding misconceptions of hospital realignment in the 21st century. In fact, Altarum has been a strong voice in commenting on the new reality of mergers and other transactions among health systems. In its December 2014 report, Altarum concludes:
“There is no evidence that provider consolidation is boosting hospital price growth.”
Since the Fall of 2014, we have witnessed a shifting tide among experts and health care professionals on the reality of contemporary hospital realignment. Decades-old data from the 1990s, used frequently by realignment critics, have been challenged by more current analyses that show, as one report states, “no consistent statistical relationship between hospital realignment and price increases.”
December 15, 2014 | FAH Hospital Policy Blog Team
The Altarum Institute released its December monthly Health Sector Economic Indicators report December 12th, which includes key hospital price data, and an observation on what those data are telling us about hospital realignment. In its monthly assessment of key health care economic data points, the Altarum Institute is able to provide comparison of year-on-year changes in health care price indices, accounting for new information and trends, and offer insights on the state of the industry.
In this month’s report, covering data through October, there is a key conclusion on the impact of hospital realignment on hospital price growth—namely that there is no impact at all. As the report explains:
Medicare and Medicaid prices usually grow more slowly than “other” prices (which include private payment). Hospital prices for Medicare and Medicaid patients changed by 0.8% and -0.9%, respectively (down 0.7% from September for Medicare and up 0.3% for Medicaid). For other patients, price growth fell to 1.9%, from 2.4% in September (data not shown). This other rate, representing mostly private payment, is the lowest since September 1998. There is no evidence that provider consolidation is boosting hospital price growth.**
Altarum’s observation of no current evidence that hospital realignment is driving price growth echoes conclusions of a study conducted by the FTI Center for Health Care Economics and Policy earlier this year. In its meta-analysis of contemporary realignments, FTI found no consistent statistical relationship between hospital realignment and price increases.
The news from Altarum’s December report is the latest piece of evidence of a critical thought movement in health care. More and more, we are witnessing long-standing misconceptions on provider consolidation up-ended by fresh and current data. The old claims of realignments causing price increases and driving competition out of the market have been replaced by studies and empirical evidence pointing to the contrary.
Today, hospital realignment is recognized for increasing or maintaining access to health care, creating more competitive health care markets, and bringing significant new benefits to patients and the communities in which we operate. Meanwhile, insurers who rely on old 1990s data to criticize hospital realignment are themselves being scrutinized, as reports reveal health insurer consolidation continues to rise at disconcerting levels, allowing payers to create monopolies and increase their market dominance, to the detriment of consumers.
The headline from the December 12th Altarum report—“Lowest hospital price growth in 16 years pushes down health inflation” is reinforced by even more recent November 2014 data released by the Department of Labor’s Bureau of Labor Statistics (BLS). The BLS data show hospital prices grew only one percent in the past year, and speaks to the enduring health care spending slowdown, responsible for record-setting low price and cost growth across a number of key economic indices in health care. Hospitals continue to work diligently to protect patient access to care while implementing key structural changes that are credited with the spending slowdown trend.
As we close out 2014, it is clear the tide of public opinion has turned on the issue of hospital realignment. Efforts by providers to protect patient care and keep community hospitals open and thriving play an important part in the transformation of our nation’s health care system.
**: emphasis added
December 09, 2014 | FAH Hospital Policy Blog Team
In a study released December 1, the Government Accountability Office (GAO) revealed research showing significant, sustained concentration in the private health insurance market from 2010 to 2013, with concentration even increasing in many states. The market share numbers among insurers once again are staggering, proving continued concentration among just a handful of insurance companies.
The study examined three segments of each state’s health insurance markets: individual, small group and large group, finding,
“…in 2013, enrollment was concentrated among the three largest insurers in most states. Specifically, in each of the three market segments, the three largest insurers had at least 80 percent of the total enrollment in at least 37 states. Further, these three market segments remained concentrated in most states from 2010 through 2013. Specifically, for each of these market segments, there were at least 30 states for which the three largest insurers had at least 80 percent of the total enrollment in each of the 4 years.”
The GAO report reinforces a well-known and extremely disconcerting trend within the health insurance industry. In October, the American Medical Association released its annual report also examining the private health insurance market, which shows increased insurer consolidation for the last 3 consecutive years. The trends in the new GAO study are notably consistent with those found in the 2014 AMA release, which reported:
In 47 states, one or two insurance companies control 50% or more of the market share.
In 17 states, a single insurance company controls 50% or more of the market share.
Taken together, the two studies show how one to three large players dominate the markets in 37 of 50 states in this country. This is even further emphasized by the AMA’s finding that 72 percent of all metropolitan areas studied are highly concentrated.
The AMA and GAO reports, which are canvassing current trends and yearly data, provide consumers with a real-time understanding about the power insurance companies are amassing for their own benefit. Critics eager to distract from these reports are quick to assert hospital realignment as the alleged reason for higher health care costs, clinging to long-standing misconceptions of the impact of mergers among health systems on patients. However, it is imperative to point to the most recent reports on hospital realignment which outline new, positive trends—that of considerable community benefits, protected patient access to care and more competitive health care markets.
Further, hospital realignment, in part, is a reaction to the vast concentration of dominant market power held by health insurance companies across all major markets and market segments. Insurers undertook aggressive consolidation efforts starting in the 1990s, completely transforming the market and the way others in the industry interact with benefit providers. Hospitals, especially local community hospitals which keep their doors open to provide critical services for communities, struggle to attain reasonable provider payment terms because they are fighting massive market power among private health insurers—and have been for more than 20 years.
The trend makes one thing clear: increased insurer concentration is bad for consumers. Insurers’ increasing monopoly power sets the stage for higher premiums and out-of pocket-expenses for consumers as well as lower provider payments. Evidence of the growing anticompetitive forces in the health insurance market is striking, with data creating a frighteningly accurate picture of the current state of our health insurance coverage system and the market power insurers wield.
November 10, 2014 | FAH Hospital Policy Blog
Over the course of recent weeks, we have seen a growing trend in press coverage of hospital realignment. More and more, reporting has highlighted cases of contemporary mergers, outlining significant benefits to patients and communities as well as robust competition in local markets where these transactions are taking place. Fresh metrics tied to 21st century hospital realignment are providing the clearest, most accurate picture of the impact on the health care industry.
And that picture provides quite the juxtaposition to the common misconceptions perpetuated since the 1990s. Reliance on twenty-year old data and reference to a U.S. economy from that era has proven to be a poor means to understand what hospital realignment means today.
A report published earlier this year by FTI’s Center for Health Care Economics and Policy provided the most comprehensive meta-analysis of the most recent research about hospital realignments to date, helping to set the foundation for understanding market realities today. The report outlined three key conclusions:
There is no consistent statistical relationship between hospital realignment and price increases.
Mergers and realignments offer significant and critical community benefits in the markets where these transactions occur.
Realignments create more competitive health care markets.
Realignments help ensure hospitals stay open, thus protecting patient access to care. More importantly, in many cases there is an expansion in services to communities that faced a potential hospital closure. At a recent event featuring several health care experts involved in realignments from all sides of the industry, one hospital executive said, “I have seen clear benefits to our community and patients. And we have seen operational efficiencies and lower costs. What we have seen of the past is one thing; what we see in the future is another thing. The types of things we can now do is game changing.”
There is one area of health care realignment where the game has not changed: health insurance consolidation. For multiple consecutive years, a study by the American Medical Association has shown increasing insurer concentration in the market and markedly decreased competition. Included in the 2014 edition of the annual study is this staggering statistic:
1 or 2 insurance companies control more than half of the market in 47 of the 50 states.
Insurers’ monopoly power means insurers can raise customer premiums and lower provider payments more freely, all at the expense of patient care.
As the adage goes: some things change, some things stay the same. When it comes to hospital realignment, it is clear the trends have shifted, for the better for our patients and the communities we serve. Unfortunately, insurance companies continue to pursue the same actions, growing their power and profit margins to the detriment of consumers.
With more and more data from contemporary mergers published, this new understanding of hospital realignment will continue to grow and the misconceptions will be resigned to history.
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