Cooperating for better care.

Doug Sherlock

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Insurer mergers seen fueling more provider mergers


“The Colossus,” by Goya.

“It’s a cyclical arms race, until {government} antitrust steps in and says that’s enough.”
Understandably, smaller,  independent providers particularly fear this.
The publication says: “The merger tremors worry  Robert Wergin, M.D., president of the American Academy of Family Physicians. Consumers’ choice of health plans would shrink, and insurers’ cost savings would not guarantee lower premiums for employers and consumers or broader provider networks, he said. ”
“The AAFP wrote a letter this month to the Federal Trade Commission warning that letting health insurers morph into leviathans would result in ‘increased leverage and unfair power over negotiating rates with hospitals and physicians.’ Deals would especially affect smaller physician practice groups like Wergin’s, ” Modern Healthcare said.
Behemoth insurers say they expect to save lots of money in economies of scale in their mergers but “Doug Sherlock, a veteran healthcare analyst at Sherlock Co., said only 15% to 20% of administrative expenses are subject to economies of scale in most mergers, making it important to not overstate potential savings.”
Critics of the merger wave have a point when they complain that consolidation in most fields, airlines and cable TV come to mind, has usually led to higher costs for consumers, not lower.Large hospital groups, for their part, cite the benefits of care coordination stemming from mergers as justification for their growth.

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