Merger counterattack: Chicago hospitals to offer low-cost health plan if deal approved

Despite increasing evidence that mergers of big hospitals result in higher costs to patients, two Chicago area hospitals may have figured out a way to head off concerns: If approved, the new system would offer local employers a low-cost health plan.

Advocate Health Care and NorthShore University HealthSystem are among the latest healthcare providers to express interest in a move into the insurance business, the Chicago Tribune reports. If the deal moves forward, the new organization would become the largest integrated healthcare delivery system in Illinois.

The new system would also offer Chicago-area employers a health plan with lower premiums, according to the newspaper. But in exchange, the plan would limit access to providers within the merged organizations.

The Federal Trade Commission has already taken steps to stop the merger, stating the marriage of the two parties' 16 hospitals would drive up healthcare costs. But the two organizations filed court papers last week to prove the merger would actually reduce expenses, by pricing the plan at 10 percent below the least expensive major HMO in the region. However, if the FTC is successful in its attempt to block the deal, the two organizations say they won't be able to offer the low-cost health plan. The organizations urge the court to throw out the FTC's request for a preliminary injunction.

"If this merger is blocked, Chicagoland consumers will be harmed by losing the opportunity to save hundreds of dollars per individual in the network every year," they said in the filing.

Advocate has already had success in the insurance business, according to the Chicago Tribune. Last year it worked with Blue Cross and Blue Shield of Illinois to offer a health plan on the state insurance exchange. The premium for the HMO plan was 10 percent less than the second lowest-cost Blue Cross plan offered on the exchange, according to the newspaper.

More hospitals are getting into the insurance game. In fact, an Advisory Board survey indicates that 28 percent of hospitals hope to launch their own insurance plan by 2018. Indeed, those organizations that have had success by offering their own health plans, use the premium dollars to invest and off-set costs rather than waiting for a third-party insurer to pay them for each claim. 

To learn more:
- read the court papers
- check out the Chicago Tribune article
- here's an announcement about the planned merger