A few days before the Obama administration finalized its ACO rule, the insurance industry met privately with the White House to make an aggressive appeal for stricter antitrust regulations by spotlighting rapid consolidation in the hospital industry, according to slides from the meeting. Insurers didn't get their way when the accountable care organization regulations came out Oct. 20, and days later physicians released a study slamming heavy consolidation among private insurers nationwide, although they said the timing of release was a coincidence and noted that doctors have also expressed concerns with hospital consolidation.
In the White House meeting Oct. 17, top brass from America's Health Insurance Plans gave a 26-page slide show presentation titled “Market concentration of hospitals,” which aggressively went after “highly concentrated” hospital ownership. AHIP said that based on the standards of the Justice Department and Federal Trade Commission, 80 percent of metropolitan statistical areas have “high” hospital market concentration.
The AHIP slides referenced the “hospital merger wave of the 1990s,” citing reports to conclude that hospital mergers and acquisitions had multiplied by a factor of nine between the beginning and middle of the decade. They added that hospital consolidation has remained on the uptick, citing various instances of Federal Trade Commission antitrust lawsuits, and spotlighting specific instances of concentration in certain regions.
The PowerPoint presentation was dated June 2011 and conducted at AHIP's behest by Cory Capps of the Washington-based Bates White Economic Consulting and Walter McNerney of Northwestern University. The slides were part of a 134-page packet presented to White House Office of Management and Budget officials that also included AHIP letters and journal articles making the case for stringent ACOs regulations.
The American Medical Association on Oct. 25 released a study that concluded health insurance markets are widely anti-competitive, especially in metropolitan areas, where they found 83 percent of insurer markets are “highly concentrated” per Department of Justice and FTC standards, and where a single company reaches over 50 percent of the market. In 24 of the 48 states studied, two health insurers controlled 70 percent or more of the commercial market share, the study found.
AMA President Peter Carmel blamed the increased concentration on industry mergers and acquisitions, saying the report “is intended to help regulators, lawmakers, researchers and policymakers identify markets where mergers among health insurers may cause competitive harm to patients, physicians and employers.”
An AMA representative told Inside Health Policy that the timing of the study “ had no connection to the release of the AHIP information” and that the physician group has been documenting insurance industry competition since 2011. “That's not to say that the AMA is solely concerned with consolidation in the health insurance industry,” the representative added. “The AMA has also expressed concern about hospital consolidation.”
Indeed, AMA testimony in a Sept. 9 Ways and Means hearing voiced concerns about both insurance and hospital consolidation, mulling the impact on patient costs. The group also complained about “antitrust barriers to physician engagement in innovative delivery models,” arguing that doctors should not be forced to partner with a hospital in order to participate in ACO-style arrangements.
Editor's Note: After publication of this article, an AHIP spokesperson emailed to note that the slides used in the White House meeting have been available on the insurance group's website since June, and that AHIP said in private what it has been saying publicly for months.