Health insurance industry consolidation a potential threat to providers

The nation's largest health insurance companies are poised to consolidate, although Aetna and UnitedHealth Group, among others, have not confirmed wide-held suspicions, reports the Chicago Tribune. Consolidation could provide already large players with economies of scale, and significant and arguably overwhelming leverage toward establishing reimbursement rates with doctors and hospitals. UnitedHealth is rumored to be interested in acquiring Coventry Health Care, while Aetna is reportedly keen to buy Humana. At the same time, smaller yet significant players such as Health Net are looking to divest themselves of some of their members that could be attractive to larger firms.

"In general, hospitals do worry if the super-insurers get bigger," said Melinda Hatton, general counsel for the American Hospital Association. The American Medical Association reports that one in six metropolitan areas in more than 300 U.S. markets is dominated by a single health insurer that covers at least 70 percent of patients enrolled in HMOs or PPOs.

"It becomes difficult for patients to have choice and doctors to get their patients the care that is needed because a monopoly has been created," Dr. James Rohack, a Texas cardiologist and AMA president-elect said. "Patients don't have as many other options."

While a case could be made that consolidation could improve organizational efficiency and lower costs, Rohack says that insurers' disparate information technology systems are bottlenecks to potential savings.

"The promise of saying we are going to come together and have administrative efficiencies and these other projected savings never materialize," Rohack said. "Most of these [health plans] have different IT platforms and software, so it is a false promise of being more efficient compared to what their track records are."

To learn more:
- read this Chicago Tribune article

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