When hospital systems purchase insurance companies they gain an advantage in the healthcare marketplace. Consolidation is happening rapidly throughout healthcare so this news is not shocking. As we reported last week, Ascension Health is in talks to purchase an "unnamed" insurance company that insures in 18 states. This used to be separate business but with the implementation of the Affordable Care Act, new incentives have led to these types of mergers. There are many results of hospital consolidation. Each organization can cut cost by reducing redundancies which makes incentives for quality care initiatives easier to reach. This is great for doctors as well as consumers. However, a downside related to this type of consolidation is that premiums for patients may rise.
A study done by Austin Frakt of the Incidental Economist, Steve Pizer of Northeastern University, and Roger Feldman of the University of Minnesota published in the Journal of Health Services discovered that premiums do rise but the quality of care does improve. As Frakt put it, this is only one study and this topic needs additional studies done.