Jury's Still Out on Whether Local Mergers Will Increase Healthcare Costs

A new report paid for by America’s Health Insurance Plans (AHIP) suggests a merger between Mountain States Health Alliance (MSHA) and Wellmont Health System would “likely lead to significantly higher post-merger prices.” AHIP aims to “advocate for public policies that expand access to affordable health care coverage to all Americans through a competitive marketplace that fosters choice, quality and innovation.” Competition Economics, LLC completed the report last month and concluded a merger would give the new organization a 77% market share, which would likely cause prices to shoot up.

MHSA and Wellmont have insisted the proposed merger will reduce healthcare costs and are currently in the process of applying for Certificates of Public Advantage (COPA) in both Tennessee and Virginia. They say the COPA process will insure the merger is in the public’s best interest. In a joint news release the two health systems called out AHIP as being an offender of increased healthcare costs saying that their efforts, “have led to double digit increases in health insurance premiums for consumers this year."
The newly formed system made by MSHA and Wellmont has had overwhelming support from the business community, the public and local elected officials. The system will include enforceable commitments to increase services, protect rural access, improve community health, and reduce significant growth in costs. MSHA CEO Alan Levine has said they will fully respond with actual facts to counter the study paid for by AHIP. Additionally, he notes that there is a study from Clemson University, Hospital Systems and Bargaining Power:  Evidence from Out-of-Market Acquisitions, which suggest that a local merger would be a good thing.

This is true in Wellmont’s case, because the alternative would have been joining a large out-of-market system, where prices would have gone up 14-18%. Ironically, the Federal Trade Commission (FTC) is approving many mergers of that nature, which are actually hurting consumers. FTC spokesperson Betsy Lordan says generally the agency likes to see competition, “When health care markets are competitive, consumers benefit from lower costs, better care and more innovation.” However, there is still no definitive answer as to whether these local mergers will hurt consumers as much as the AHIP asserts that they will and so the debate continues on the lasting effect that these local mergers will have on healthcare consumers.

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