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Doctors and Plans Blame Each Other for Costs

John Commins, for HealthLeaders Media, November 29, 2012

That sentiment was echoed by Anthony Wright, executive director of Health Access California, a consumer advocacy coalition.

"This is one of those rare cases where I agree with both sides, just probably not the way either of them wants," Wright says. "Clearly, provider consolidation does have an impact on healthcare costs, but so does the consolidation in the health insurance market. That is true at the insurer level and the provider level. When a provider has such a huge foothold in a given market, then every insurer to do business in that area has to contract with that provider and they are in a privileged position to demand a higher reimbursement, which is reflected in cost."

"At the same time, if there are only a couple of prevalent insurers in a market, like Kaiser and Blue Cross and Blue Shield in California, there is not the robust competition to bring down prices. You need to look at other means of looking at rates, including more vigorous rate review and regulation."

On the health plan side, Pauly says the dominance of the insurance markets has existed since World War II, while the consolidations on the provider side are more recent phenomena.

"There has been a tendency more worrisome to economists that hospitals have been consolidating. That has been more of a change," he says. "The insurance market has been bad but it is not getting worse. But the provider market is getting worse, and on top of hospitals consolidating in many cases, now large physician groups like the orthopedic surgeons are organized into a few large groups that probably also aren't as competitive as they would be if they were individual doctors that insurers could play off of one another."

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3 comments on "Doctors and Plans Blame Each Other for Costs"


JosiePatrick (11/29/2012 at 3:20 PM)
Let me get this straight. Dr. cannot make enough money unless they form larger and larger provider groups and reduce duplication and overhead. And insurers don't want to enter markets because they can't make enough money. Single payer would get rid of both these concerns and get costs under control. Do healthcare consumers really want to pay for either the inefficiencies of competition or the overpricing of monopolies? It's time for insurers to rethink their business model. Time for employers to get out of the healthcare business. And time for providers to carefully consider what their career expectations are.

kerry willis (11/29/2012 at 2:46 PM)
40% of the healthcare dollar is spent on administration...How come the insurance companies only want to "save" on the 60% of healthcare spending that provides jobs and bonuses to administrators...what a joke Additionally the biggest area of spending on physicians that is increasing is with Docs employed by a hospital where the Hospital charges excessive facility fees and negotiates larger reimbursement rates than insurance companies allow private Docs......and the spending increase is whose fault again?

jkuriyan (11/29/2012 at 10:08 AM)
Because of the promotion of integrated care management & delivery ACA encourages provider consolidation so we cannot just talk about breaking up provider groups as a way to increase competition.