Do healthcare mergers affect insurance rates? Pa. doesn’t know

HARRISBURG, Pa. (WHTM) – A major proposed healthcare merger is on the rocks.

Two government agencies said Tuesday if PinnacleHealth and Penn State Hershey Medical Center link up, patient care will get worse and more expensive.

The two healthcare groups currently compete with one another, and patients reap the benefits. If the merger goes through, the state attorney general’s office and the Federal Trade Commission says more than half a million people will suffer.

With nearly $2.5 billion in revenue between them and more than 1,100 combined hospital beds, PinnacleHealth and Penn State Hershey are the two biggest healthcare providers in the Harrisburg area.

“We really have no interest in the companies per se,” said AG’s office spokesman Jeffrey Johnson, “but it’s more so looking after the individuals who could be impacted.”

That’s what spurred the two agencies to announce Tuesday they plan to formally oppose the impending merger.

“Less competition,” Johnson said, “it could potentially lead to increased prices for the consumer.”

They argue it would limit the ability of health plans to negotiate pricing. “Health plans have been able to use the threat of dropping one of the hospitals from their networks to extract price concessions,” the AG’s office writes in a news release.

“There also may be less incentive for those entities to continue improving and offering more services,” Johnson said.

The healthcare providers say they are “extremely disappointed that the FTC does not share the enthusiasm of the many employers, community leaders, private physicians, commercial insurance providers, and others” who support it.

The companies say it would result in lower costs for better care.

“By coming together,” they wrote in a shared news release, “PinnacleHealth and the Milton S. Hershey Medical Center also create a powerful platform to produce future generations of health care providers and make discoveries that improve health.”

The government groups estimate the combined company would control 64 percent of the market. They want to avoid the dominance of a single healthcare provider, like UPMC in Pittsburgh.

But what actually happens when two hospital groups team up?

We asked the state’s Insurance Department how insurance rates changed after another Midstate merger, Holy Spirit Hospital and Geisinger Health System.

The response: They don’t know.

Ronald Ruman, the department’s press secretary, writes in an email, “We don’t track that way and there are way too many variables-many insurers and other facilities.”

Both healthcare groups are reviewing their legal options. The AG and FTC planned to file a formal complaint Wednesday.

An administrative trial will follow next May.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s