We previously raised concerns about the most recent “The Price Ain’t Right” study by a group of academic economists that attempted to link hospital concentration and price. We went a step further and asked the very experienced team of economists with Charles River Associates to take a deeper dive. These same economists, who have worked on dozens of hospital transactions, weighed in on the first study finding it seriously flawed. Not surprisingly, this update fared little better.

 

While downplayed, even the authors admit that their research doesn’t conclusively link market structure with prices and so, we’d urge, should be taken with canister of salt or at best viewed as “interesting.” Among the most obvious flaws, even to non-economists, is that its conclusions rely on a database that lacks Blue Cross Blue Shield information on contracts and prices. Even a cursory review of the latest American Medical Association data on insurer market concentration show that those plans dominate the nation’s health insurance markets. Recognizing that, the authors attempt to compensate without any success. In fact, their data show that “in markets with high BCBS share, hospital mergers are not associated with any significant change in hospital prices for Aetna, Humana, and UnitedHealth post-merger.”

 

Other flaws include findings inconsistent with the way in which hospitals’ contracts with insurers are actually negotiated and hospitals’ preferences for certain types of contracts based on discounts-off-charges. Moreover, by focusing on a single service – MRIs – instead of an entire bundle of services to evaluate prices, the authors once again fail to appreciate the dynamics involved in real-world negotiations and so their conclusions come up short once again. In contrast, a 2017 study prepared for the AHA by Charles River Associates confirmed that hospital mergers result in efficiencies, savings, innovation and quality improvements essential to transforming health care delivery, all of which benefits patients.

 

For a more real-world view of hospital transactions and the benefits to patients from greater coordination and focus on quality, see the deeper dive prepared for AHA by Charles River Associates.

 

Hatton is AHA senior vice president and General Counsel

Related News Articles

Perspective
On Tuesday, the Census Bureau reported that “a third of Americans now show signs of clinical anxiety or depression” due to the COVID-19 pandemic. It’s also…
Headline
The Centers for Medicare & Medicaid Services yesterday released a fact sheet for state and local governments seeking Medicare, Medicaid or Children’s…
Headline
An annual report into death by several factors tied to mental health and wellbeing — otherwise referred to as “deaths of despair” — topped 150,000 in 2018. The…
Headline
State Medicaid programs are reporting an uptick in enrollment compared with their fiscal year 2020 projections, due in part to the COVID-19 pandemic. The…
Headline
As part of Mental Health Awareness Month, Bruce Bailey, president and CEO of Tidelands Health based in Georgetown, S.C., talks about how hospitals and health…
Blog
Like all of America’s hospitals, Tidelands Health has a longstanding commitment to improving access to high-quality, affordable services. This includes…