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Will Consolidation Increase or Decrease the Cost of Healthcare?


Consolidation is already occurring at a rapid pace within the healthcare industry. That will lead to clashes between payers, providers and others. But will it lead to lower costs for consumers?

By now you know that a) hospitals are gobbling up practices, b) hospitals are gobbling up each other and becoming vertically integrated delivery networks, and c) health insurance companies are merging, too.

In the meantime, private practice is shrinking and doctors over age 65 represent about 20% of the US physician workforce. What does all this sick-care econospeak have to do with the price of bananas? What does this mean for how much you will pay for care the next time you have the unfortunate need to "interact with the system"?

As we all know, finding out what something will cost you in the doctor's office is a Herculean task and not for the faint of heart. Opaque pricing is wreaking havoc and making patients and their doctors really, really mad.

But, this is a mere side show compared to the main event: big providers fighting with big payers, including Uncle Sam (i.e. the taxpayers) over getting paid for and setting prices for products and services.

One side says provider and payer consolidation will drive down prices and insurance costs. Given recently announced increases in proposed rates for health insurance, many are doubtful and argue that, to the contrary, monopolies or oligopolies just restrict competition and drives up prices.

The struggle for the American sick-care dollar is intensifying and, in most instances, patients and their doctors are collateral damage. It is possible that patients will have their say as sick-care market consumers and be able to negotiate prices. It is possible that doctors will get a clue that market consolidation is almost a given to survive. In the near term, however, these will be mere skirmishes. The shock and awe will be happening on a different front and will ultimately determine who wins not just the battles, but the war.

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