Another viewpoint: Study suggests healthcare mergers, acquisitions should be monitored

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EDITORIAL:

(Jeffersonville & New Albany) News and Tribune

Indiana patients are paying more for medical care than their midwestern neighbors, according to researchers with the University of California-Berkley.

According to detailed coverage by the Indiana Capital Chronicle of an October joint meeting of interim study committees, Cal-Berkley researchers found Hoosiers endured an increase of 48% per capita for healthcare spending from 2011 to 2020. Illinois, Michigan, Ohio and Wisconsin saw an increase of 35% over that same period.

While some physicians and the Indiana Hospital Association questioned the findings and the reasons for the higher costs, there’s no denying that Hoosiers are paying more for medical care.

THE STUDY COMMISSIONED by the Indiana General Assembly in 2021 found that the state’s top three insurers hold almost 68% of the market share, with Blue Cross Blue Shield of Indiana controlling almost 45% by itself.

Likewise, researchers found large hospital systems dominating most of the Indiana market.

“The healthcare sector in Indiana is a microcosm of the healthcare system in the United States, consisting of dominant health insurers and a delivery system that has evolved into a patchwork of hospital systems that have grown in size and geographic scope via mergers and acquisitions, including vertical acquisitions of physician organizations,” researchers wrote.

The study can be viewed online at iga.in.gov. For those of us who don’t speak market restructuring, vertical acquisitions, or vertical integration, is a fancy way to define controlling multiple facets of production and sales.

Streaming services are an example of vertical integration. Netflix is no longer a conduit between filmmaker and viewer. Instead, Netflix produces its own shows and movies. There was a time when a customer may have purchased a Netflix subscription to watch a movie they could have rented elsewhere. Much of the programming is now produced by the company, and thus a customer has to pay for a subscription to view it.

While such a strategy makes sense for profitability, it can be problematic for public health. If a healthcare system owns the hospital as well as most of the physicians’ offices and pharmacies and a large insurance company dominates the same market, competition goes out the window, and costs are hard to control.

HEALTHCARE ISN’T A SECTOR where profit should be the dominating factor. A person shouldn’t be forced to choose between going to the doctor and buying groceries, or between filling a prescriptions and paying the electric bill.

As much as GOP candidates touted taming inflation in the recent election, Indiana’s Republican supermajority should make a priority of addressing this problem when the Legislature convenes in January.

As the Cal-Berkley researchers noted in their findings, Indiana isn’t the only state facing these issues, but others states have acted by establishing review processes for healthcare mergers and acquisitions.

Indiana should follow their lead. Competition is healthy for a free market, and manageable medical prices are paramount for a healthy Indiana.

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