"Harvard Pilgrim has a footprint that extends outside of the state. One would assume that both parties look to gain market share and reduce transactions costs," Gary says. "A gain in market share for either will come at the expense of their competitors, including Blue Cross Blue Shield in Massachusetts."
Impact of the merger
Gary says that, in addition to state regulators, the anti-trust division of the Department of Justice will almost certainly want to review the transaction. Luke Froeb, the DOJ's newly appointed deputy assistant attorney general for economics was Gary's professor at Vanderbilt University, and Gary recalls him as market-oriented.
"However, I would be very surprised if he didn't want to explore the potential impact of this type of merger on the health insurance industry, the hospitals in Massachusetts, as well as impacts on costs and access to care for patients," he says. "There is a long history with integrated staff model health systems. Some of that history is good and some far less so."
The proposed merger could benefit consumers as well as the two organizations, says Jeffrey Le Benger, MD, CEO of New Jersey–based Summit Medical Group, a physician-owned, multispecialty medical practice in the New York/New Jersey metropolitan area.
"The health system is looking at cutting out the payer and becoming their own payer, and that is where the cost savings will come. The beneficiaries could eventually benefit from that," he says.
Consumers could benefit if employers enjoy lower premiums and pass on some of the savings to employees in the form of improved benefits and higher wages, Le Benger says.
Such mergers appear unavoidable in the current healthcare environment. The necessity of managing rapidly growing healthcare costs along with a continuously changing health insurance landscape have forced regional health insurance carriers and healthcare providers to look for opportunities to drive efficiencies in healthcare delivery, says Tom Silliman, regional vice president of sales with Hodges-Mace, a benefits management company.
"While we are always concerned about mergers limiting the healthcare choices of our customers, we have seen similar strategies executed across the country," Silliman says. "Our hope is that this proposed merger would deliver more competitive health insurance options for our customers while improving access to the care that they need."
Gregory A. Freeman is a contributing writer for HealthLeaders.