Seeking lower prices where providers are consolidated: an examination of market and policy strategies.
The ongoing consolidation between and among hospitals and physicians tends to raise prices for health care services, which poses increasing challenges for private purchasers and payers. This article examines strategies that these purchasers and payers can pursue to combat provider leverage to increase prices. It also examines opportunities for governments to either support or constrain these strategies. In response to higher prices, payers are developing new approaches to benefit and network design, some of which may be effective in moderating prices and, in some cases, volume. These approaches interact with public policy because regulation can either facilitate or constrain them. Federal and state governments also have opportunities to limit consolidation's effect on prices by developing antitrust policies that better address current market environments and by fostering the development of physician organizations that can increase competition and contract with payers under shared-savings approaches. The success of these private- and public-sector initiatives likely will determine whether governments shift from supporting competition to directly regulating payment rates.
Paul B. Ginsburg (paul.ginsburg@usc.edu) is the Norman Topping/National Medical Enterprises Chair in Medicine and Public Policy at the Sol Price School of Public Policy and the Leonard D. Schaeffer Center for Health Policy and Economics, University of Southern California, in Los Angeles.
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L. Gregory Pawlson is a senior medical consultant at the law firm Stevens and Lee in Lancaster, Pennsylvania.
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D016363:Antitrust Laws / Q000191:economics; D003132:Commerce; D003363:Cost Control / Q000191:economics / Q000331:legislation & jurisprudence; D003695:Delivery of Health Care / Q000191:economics* / Q000331:legislation & jurisprudence; D004465:Economic Competition; D017754:Group Purchasing / Q000191:economics* / Q000331:legislation & jurisprudence; D006759:Hospital-Physician Joint Ventures / Q000191:economics* / Q000331:legislation & jurisprudence; D006801:Humans; D007349:Insurance, Health, Reimbursement / Q000191:economics / Q000331:legislation & jurisprudence; D008389:Marketing of Health Services / Q000191:economics* / Q000331:legislation & jurisprudence; D058991:Patient Protection and Affordable Care Act / Q000191:economics* / Q000331:legislation & jurisprudence; D020400:Provider-Sponsored Organizations / Q000191:economics / Q000331:legislation & jurisprudence; D014481:United States
Cost of Health Care; Financing Health Care; Health Economics; Hospitals