Insurers vs. Hospitals: Who Has the Upper Hand?

Jeff Elliott for HealthLeaders Media, December 8, 2010

For years, hospitals have complained of getting the short end of the stick on reimbursements. Come to find out, they were just blowing smoke.

According to a study by the Center for Studying Health System Change (HSC), hospitals are successfully negotiating higher-than-competitive prices with insurers. So much so, the study claims, that the prices are an anomaly compared with other industries in competitive markets.

The report's conclusion was that rates varied significantly from region to region and sometimes even within the same market—the result of hospital concentration in certain area, authors said. The Both National Public Radio and the Wall Street Journal found this story interesting enough to thoroughly cover, noting that even a hospital's prestige in certain markets appeared to carry additional negotiating weight.

Hogwash, hospitals say. "The newly released publication on variation in private insurer payment rates is too deeply flawed to be a usable policy tool," said Rich Umbdenstock, president and CEO of the American Hospital Association (AHA) in a statement. "The publication reaches faulty conclusions based on unverified data from a handful of powerful insurance companies."

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