It’s a hard diagnosis. Health care costs are rising everywhere, and the most helpless bystanders are sick people. The News & Observer and The Charlotte Observer have done two series on the issue, one showing that the consolidation of hospitals through mergers and acquisitions has given the larger hospital organizations considerable power to charge insurance companies more for care.
And, the hospitals are making big money in other ways – most notably, as another series showed, on cancer drugs, which some mark up to two to 10 times over costs. And these are the large nonprofit hospitals.
Now, state Attorney General Roy Cooper is looking into ways his office might act, either through antitrust suits or with new legislation, to curb some of those costs. Other states also are investigating hospital practices.
Cooper seems to think that if consolidations have driven up costs to consumers, there might be an antitrust angle here. That could make things interesting.
The N.C. Hospital Association says the consolidations, which have put tremendous pressure on smaller, rural hospitals, aren’t really driving up costs all that much. The association is no insignificant player in the debate. It has dug deeply to contribute to politicians over the years (including Cooper, by the way) to protect the interests of its members.
That might make legislation to clamp down on drug prices or consolidations mighty difficult. The association has beaten back attempts at pro-consumer legislation before. Legislators rise up in high indignation when they’re accused of taking care of special interest groups that give them money. But then they take care of special interest groups that give them money.
Cooper rightly notes that antitrust laws are hard to enforce. It would be difficult, for example, to absolutely, positively prove that hospital mergers drive up prices, even though common sense would seem to suggest that they do.
The attorney general also says that much-ballyhooed “competition” among hospitals, which the industry says is a way to drive down costs (if people can “shop around” for certain care), doesn’t help patients much if they can’t get access to pricing information for purpose of comparison, and that’s tough for them to do as things now stand.
The entire shopping-around analogy doesn’t really work, anyway, considering that most patients go to hospitals their personal doctors recommend or to places where specialists, to whom they’re referred by their primary care doctors, work.
Then there is “cost-shifting.” This is another maddening aspect of the billing system. Patients with good insurance get huge bills and then their insurance companies negotiate the prices downward. But if there are fewer choices of different hospitals, if the market is controlled by a small number of companies, then those insurance companies have a weaker bargaining position.
Meanwhile, the inflated payments help to cover charity care. But while hospitals do take care of people without insurance (a great many of them rely on emergency rooms for primary care), they don’t seem to be hurting on the bottom line. Duke and UNC made big profits last year as nonprofits.
Cooper acknowledges that the road to any kind of reform, using legislation or existing antitrust laws, will be twisting and turning and bumpy. But at least he’s among those trying to help average folks.