ACO conundrum: Market consolidation could push prices up

What can be done to prevent accountable care organizations from becoming monopolies that push prices up?

That's a question government officials are wrestling with, the Fiscal Times reports. At least theoretically, ACOs will be financially rewarded for raising healthcare quality while cutting costs.

But with the wave of mergers spurred by the healthcare reform, officials are concerned that monopolies could emerge and drive prices up.

Something like that happened in California over the first half of the 2000s when hospitals merged and physicians became part of large independent physician practices to neutralize the bargaining power of insurance industry HMOs, which dictated prices. According to a recent study of the market, hospital prices doubled and overall healthcare costs climbed 11 percent between 1999 and 2005, which was higher than the national healthcare inflation rate.

An older study conducted for the Robert Wood Johnson Foundation found that a wave of mergers between 1990 and 2003 raised prices between 5 and 50 percent, and possibly lowered quality.

Some industry observers fear ACOs could exacerbate an existing problem. "The issue is market power," said Robert Berenson, senior fellow at the Urban Institute, who worked on the California study.

To learn more:
- read the Fiscal Times article

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