The consolidation of players within any given health care sector — insurers, multihospital health systems, or private equity-backed entities — that is done to achieve greater market leverage can significantly affect other sectors, including emergency medicine practices. 

The national conversation about health care consolidation has tended to focus on the practitioners’ side, said Atul Grover, MD, PhD, internal medicine physician, executive director of the Association of American Medical Colleges (AAMC) Research and Action Institute, and lead author of a recent AAMC paper, “Why Market Power Matters,” which details this trend.¹ But while mergers, consolidations, and the resulting decrease in competition have generated a lot of concern among policymakers, Dr. Grover said those involving hospitals and other health care groups shouldn’t necessarily be considered a bad thing, especially in light of the merger mania in other sectors of health care.

“In truth, there has been consolidation in health care for decades, with the bulk of it happening outside the provider realm, especially with insurers,” he noted. This consolidation of insurers suggests that policymakers’ exclusive focus on regulating provider consolidation, but not insurers’, is short-sighted.

The AAMC’s study assessed consolidation state by state, defined by the combined market power of the three largest insurers and three largest health systems in any given state. For example, in North Carolina the three largest health systems — Atrium Health, University of North Carolina Health Care System, and Novant Health — have a combined market share of 49.6 percent of all inpatient hospital discharges, whereas the three largest insurers, Blue Cross Blue Shield of North Carolina, UnitedHealth Group, and Cigna Health Group, together control 95.5 percent of the market share of privately insured patients.

On average across states, the three largest health care systems in a state control 43.1 percent of their state market, compared with 82.2 percent of market share controlled by the three biggest large-group insurers. With this consolidation bulking up insurers, Dr. Grover said, it becomes difficult for health care practitioner groups to negotiate effectively with them. That has played a large role in defining how health systems might try to compete in the marketplace.

Tired of Subsidizing

James Augustine, MD, FACEP, a clinical professor in the department of emergency medicine at Wright State University near Dayton, Ohio, and now a medical director of fire and EMS groups after 40 years as an emergency physician, said that health care billing and payment, especially for emergency medicine, is a complex terrain. Private insurers are growing tired of always subsidizing Medicare and Medicaid, which reimburse below cost, but they want to make sure there will always be a well-staffed emergency department waiting to provide good care in the right setting for their members’ emergency needs.