Do consumers benefit when health insurers own providers?

Whenever a major merger is announced in health care, the parties routinely tout the benefits for consumers, saying costs will decline and quality will improve. But do the facts bear out these claims?

During the press events announcing these deals, there’s no way to know. Researchers would need a baseline and several years of data to verify the merging partners’ claims and even then such results such as lower costs and improved quality take years to accumulate and measure.

When reporting on one such deal for Bloomberg, consider how Zachary Tracer explained the details behind the purchase of DaVita Medical Group in 2017. At the time, UnitedHealthcare’s Optum unit was planning to spend $4.9 billion for the group, although that amount was reduced about a year later to $4.3 billion.

Note that UHC is the nation’s largest health insurer with 49.5 million members. As Tracer reported, the acquisition would mean UHC would own the largest collection of physicians in the United States. The Bloomberg headline says, “30,000 Strong and Counting, UnitedHealth Gathers a Doctor Army.”

“UnitedHealth is betting that controlling many doctors can provide patients better care at a lower cost, and steer them away from expensive hospital stays,” Tracer wrote. But then he explained the strategy behind the deal: “Bringing more doctors in-house provides a buffer against rivals and places an imposing moat in the path of upstarts,” he said.

Addressing this point, he quoted a health care consultant who said UHC’s acquisition of physicians was “scaring the crap out of hospitals in many markets.”

While Tracer’s article is an excellent example of how to cover such deals, he like most health journalists, was unable to answer the larger question of whether the merger would actually benefit consumers.

That task falls to a panel of experts who will explore this question at Health Journalism 2019 in Baltimore this week. The panel discussion, “When Payers Own Providers,” will be on Saturday, May 4, from 10:40 am to noon, at the Hilton Baltimore.

The members of the panel are Kavita K. Patel, M.D., M.S., vice president, Provider and Payer Strategy, at Johns Hopkins Health System. Patel also is a member of federal Department of Health and Human Services’ Physician Focused Payment Model Technical Advisory Committee. During the Obama Administration, she was the director of policy for the Office of Intergovernmental Affairs and Public Engagement in the White House.

The other panel members are Jessica Van Parys, Ph.D., an assistant professor at Hunter College and an economist specializing in health care research and public policy; and Sara Rothstein, director of the Health Fund for the 32BJ Benefit Funds, a union in New York City.

Patel and Van Parys will address the questions about why payers and providers are merging and the policy implications of such vertical integration. Rothstein will outline the strategies the Health Fund uses to ensure that its members get the best care at the lowest cost regardless of provider ownership.

All three panel members will examine the effect of ownership changes on patients, employers, unions, and other purchasers. In addition, the plan will explore what can happen when patients seek care from a physician group the insurer doesn’t own. Follow along with the panel using #AHCJvertical

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