Employer fights potential monopoly from hospital merger

Ending Hospital Dominance of Policy | Partners for Truth in Health CareSuffering under the crushing burden of health care costs, Americans have been looking for a hero for many years now. A person or institution that can shake things up and bring costs down. Some analysts have argued that large employers were best positioned to accomplish this, and a steel producer in West Virginia is trying to prove them right.

For several years now, Steel of West Virginia has been fighting the proposed merger between Cabell Huntington Hospital and St. Mary’s Medical Center. Two suits will be heard by the state Supreme Court on Jan. 23. Both seem somewhat technical in nature, but both are targeted at preventing the potentially harmful result of the merger: higher prices and diminished quality of care.

Hospital mergers often result in monopoly

What’s happening here is typical of many proposed mergers, especially in smaller locales like Huntington, W. Va. Once the merger is approved, the hospital ends up with a virtual monopoly in the region and the power to charge whatever price it wants for health care services.

Why is Steel of West Virginia fighting the lonely battle? Because employers are now averaging about $14,000 a year in expenditures for employee health care coverage. That’s more than double the cost10 years ago. Meanwhile, employers are fast approaching the tail end of “cost-sharing” efforts with their employees, in which employee deductibles and co-pays rise to keep premiums down. The American populace has responded to such escalating out-of-pocket costs by skipping health care altogether. More radical solutions seem imminent.

Some employers are fighting the good fight

We’ve blogged previously, here and here, about the varying approaches some employers are taking to control their costs. Some strategies, like Safeway’s experiment with reference pricing, are already proving successful.

Bottom line: Employers have a captive audience in their employees. They could have a major influence on their employees’ health care spending habits, if they chose to do so. And employees would welcome the assistance.

Let’s hope more employers take advantage of their position. And let’s cross our fingers on Jan. 23 for Steel of West Virginia.

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