Over the past several years, big players in the healthcare industry have consolidated, leading to higher prices and decreased choice in the insurance market. This was the reason cited by the federal judge who blocked the Anthem-Cigna merger in February.
As the judge, Amy Berman Jackson, wrote in her decision:
The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market.
This decision followed a similar decision in January that blocked a $37 billion merger between Aetna and Humana.
But this doesn’t necessarily mean that healthcare mergers are going away. If anything, insurers might use these decisions in order to get smarter about how they approach mergers in the future. As the Washington Post reported, Anthem’s chief executive Joseph R. Swedish responded by the decision saying he would file an appeal.
Healthcare consolidation presents numerous challenges for providers, as Paul B. Ginsburg of the Brookings institution recently told the California Senate Committee on Health:
There is more pressure on payment rates. New contracting models, such as Accountable Care Organizations (ACOs), tend to require more scale. The system is going through a challenging transition to electronic medical records, which is expensive and requires specialized expertise to avoid pitfalls.
Healthcare is a symbiotic system between patients and the providers and insurance companies that play valuable roles in their care. As insurers merge, and healthcare policy evolves, providers have a substantial role to play in helping insurers understand patient need and in keeping the cost of healthcare down. After all, without providers, there can be no care at all.