A New York Times editorial “The Risks of Hospital Mergers” describes how a merger of two major hospitals in the Boston Region created a monopoly that was used to drive much higher fees from insurance companies. Of course these costs were passed along to the public.
According to the Times:
“The experience in Massachusetts offers a cautionary tale to other states about the risks of big hospital mergers and the limits of antitrust law as a tool to break up a powerful market-dominating system once it is entrenched.
“One purpose of the 1994 merger, as the president of Mass General acknowledged in 2010, was to take away the ability of insurance companies to demand lower prices from one hospital with the threat that they could just send patients to the other. After the merger, insurers had to take both of them or neither.
“The bargaining power of the merged institutions was starkly displayed in 2000 when the Tufts Health Plan refused to pay Partners what it considered unjustifiably high prices. Partners promptly announced it would no longer accept Tufts insurance and created an uproar among members of the Tufts plan who wanted to retain access to the two prestigious hospitals. Faced with defections that could destroy its viability, Tufts quickly caved in.”
How many Lancaster residents would accept insurance plans that excluded Lancaster General Hospital (LGH)? And since most people are insured by their companies, how many companies would dare to subscribe to such insurance?
Public charitable foundation LGH has been making matters all the worse by gobbling up medical practices, thus tightening its strangle hold on health care here in Lancaster.
Most of us are outraged over the $100 million of public funding that has or may someday go into the Convention Center. But it may cost us that much every few years in hidden health care costs because LGH’s monopoly leads to bloated costs and the spending of its vast earnings in a manner often not in the interest of the public.
One thing that could and should be done is a reform of its unrepresentative, self-perpetuating, and largely benighted board of directors.
For more information about LGH, visit NewsLanc’s ‘LGH Series’ .
