Greenbeard
Gold Member
Bloomberg has a good read today: "Why Baby Costs Less Down the Road in Silicon Valley". It's essentially an article on how provider consolidation is driving up health care prices:
This is a point I've brought up before, in a thread on the courts overturning Massachusetts' cap on insurance rates and a thread about a possible alternative to the public option concept (all payer rate setting). Providers are playing a role in our rising spending and the consolidation mentioned in that Bloomberg article is a good illustration of that. To quote from a paper from a few years ago:
After Mark Logsdon tore a ligament in his knee skiing at Lake Tahoe in March, he returned home to suburban Sacramento and had an MRI scan at Sutter Davis Hospital.
Sutters price for the knee scan was $1,271, payable by Logsdon and his insurer. Exactly the same MRI at one of the local imaging centers owned by Radiological Associates of Sacramento would have cost $696 -- 45 percent less.
It turns out that Logsdon didnt know something that his insurance company does: Sutter Health Co., the nonprofit that owns Sutter Davis, has market power that commands prices 40 to 70 percent higher than its rivals per typical procedure -- and pacts with insurers that keep those prices secret.
Sutter can charge these prices because it has acquired more than a third of the market in the San Francisco-to-Sacramento region through more than 20 hospital takeovers in the last 30 years, according to executives of Aetna Inc., Health Net Inc. and Blue Shield of California, who asked not to be named because their agreements with Sutter ban disclosure of prices.
This is a point I've brought up before, in a thread on the courts overturning Massachusetts' cap on insurance rates and a thread about a possible alternative to the public option concept (all payer rate setting). Providers are playing a role in our rising spending and the consolidation mentioned in that Bloomberg article is a good illustration of that. To quote from a paper from a few years ago:
Table 1 provides statistics on concentration in hospital markets at 5 year intervals over the period 1985-2000.1 The table shows that the Herfindahl-Hirschmann Index (HHI) for U.S. hospitals has been steadily increasing over time. In particular, the median HHI increased from 3,028 in 1985 to 3,995 in 2000. This is an increase of almost 1,000 points on a very large base. An HHI of 3,000 indicates a very concentrated market for example, a market with three equally sized firms will have an HHI close to this value (3,333). The FTC and DOJ consider markets with an HHI above 1,800 as highly concentrated. For highly concentrated markets such as these, the enforcement agencies consider any increase in the HHI of 100 points or more as presumptively anticompetitive (Federal Trade Commission and Department of Justice, 1992). The increase in median concentration from 1985 to 2000 is far greater than that threshold.