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Payer Consolidation Will Hurt Quality of Care. Unless it Doesn't.

 |  By JBoivin@healthleadersmedia.com  
   July 16, 2015

Narrower networks of providers and increased premiums could erode quality. Or patient outcomes could improve if insurers are as interested in quality care as they are in market share. It's complicated.

The words "choice," "networks," and "access" are mentioned most often in conversations about healthcare quality and insurance industry consolidation. Whether market consolidation will widen access and networks, reduce choices of providers, or make consumers pay more for them; depends on who you talk to.


Robert J. Town, PhD

 Even the experts admit no one knows how the healthcare industry will shake out once the ongoing consolidation of health insurance companies, as well as the merging of hospital systems and larger physician groups, is finished.

"It could be a good thing, depending on how insurers structure their networks," Robert J. Town, PhD, a professor in the Health Care Management Department in the Wharton School at the University of Pennsylvania told me. 

If they choose, insurers could narrow their networks of hospitals and physicians by focusing on measures of quality that consumers may not be as adept at observing or judging, he says. If insurers are smart buyers of quality health services, consumers will benefit. That's the best case scenario, he adds.

Quality of care could suffer, though, if insurers craft narrower networks just to gain greater bargaining power with physicians and hospitals, unrelated to quality, Town says. This would leave consumers fewer choices, but not necessarily better quality.


Aetna's $37B Humana Acquisition Has Providers Wary


Peter Pronovost, MD, PhD, FCCMD, director of the Armstrong Institute for Patient Safety and Quality, senior vice president for patient safety and quality at Johns Hopkins Medicine, agrees the consolidation could help drive quality improvement through narrower networks that select higher quality providers.

He told me that a smaller pool of insurance companies could also lead to better quality if insurers are willing to agree on quality of care measures and the administrative forms required of providers.

"Every insurer has its own dashboard of quality and safety measurement data that they use to evaluate services," he says. "Some of them are quite similar in concept but their definitions vary.  Hospital systems have already been encouraging insurers to agree on valid measures that are more standardized," he adds.

 

Insurers also have different administrative processes and forms to submit claims for payment, Pronovost says. The more variation, the more waste. Standardization could help here as well.
"We need to hire extra staff to cut the data for how each insurer wants it done," Pronovost says. "If we could reduce redundancy in the types of measures (and forms) required we would be able to focus more of our resources on improving performance rather than spending money on just collecting and reporting he data."


Peter Pronovost, MD, PhD

Aetna boasts that its merger with Humana will create higher quality care for its consumers at less cost. The merger, says an Aetna press release, "builds on each company's respective efforts to provide innovative, technology-driven products, services, and solutions to build healthier populations, promote higher quality health care at lower cost, and offer greater transparency and convenience for consumers."

Providers who will be negotiating with these mega-sized companies for payment doubt the mergers will improve quality, however. They believe consolidation leads to narrower provider networks and fewer choices for quality care.

Like schoolyard bullies, larger companies will have more strength in the marketplace when contracting for services with providers, Robert L. Wergin, MD, FAAFP, president of the American Academy of Family Physicians told me this week. Small hospitals and physician groups will especially feel the pain from having less bargaining power for reimbursement, he adds.

But Pronovost counters that large, academic medical centers may be the ones excluded from networks because of their higher costs for research, treatment of more complicated cases, and the training of future physicians.

Robert L. Wergin, MD


Organizations React
AAFP sent a letter to the chairman of the Federal Trade Commission, saying: "Proponents of mergers in the (health insurance) industry will proclaim that consolidation will make the industry more efficient and, therefore, more affordable for individual consumers. However, in our opinion, mergers in the health insurance industry would have an immediate and profound impact on the availability and affordability of health insurance for millions of consumers."

The American Medical Association concurs. "The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients as health insurers substitute corporate policy over good clinical decisions," AMA President Steven J. Stack. M.D, said in a short statement released after news of the merger last week.

But assuming that insurers are only interested in profits and not quality is off base, Wharton's Town says: "They are interested in both.

 

Janet Boivin, RN, is senior quality editor at HealthLeaders Media. Twitter

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