The trigger for these mergers is the Affordable Care Act. One can’t help but wonder if the quest for accessible and affordable healthcare has made physicians worse off.

Well it’s happening. Humana is officially seeking a buyer, despite its dominant position in the marketplace. Cigna and Anthem, two biggest players in the insurance market have announced their merger plans, while members of the AAFP are warning the Federal Trade Commission (FTC) about the dangers that insurer consolidation brings to physicians and their patients. Whether they will end up being scrutinized under “antitrust laws” is a topic for another day.

Healthcare pundits have been predicting this trend as a blowback of the Affordable Care Act. Insurers want to become larger to gain clout in negotiations with the government, regulators, physicians and consumers.

At the other end, Insurers are touting these mergers as the need of the hour to create economies of scale that will lead to cost savings & efficiency, thus “unlocking potential for new treatments, technologies and clinical discoveries to help patients…”

Dr. Steven J. Stack, the AMA’s president believes

 “The lack of a competitive health insurance market allows the few remaining companies to exploit their market power, dictate premium increases and pursue corporate policies that are contrary to patient interests. Health insurers have been unable to demonstrate that mergers create efficiency and lower health insurance premiums,”

Translation:

Essentially, insurance company consolidations decrease marketplace competition, and greatly limit choices for consumers. The recent narrowing of physician and hospital networks is already negatively impacting the industry, and more mergers and consolidations would exacerbate an already-bad situation. The more a single insurer holds influence over the market, the more physicians and their patients have to worry about being separated.

These two deals would alter the landscape of U.S. health care and reduce the five giant U.S. health companies to just three, including UnitedHealth Group of Minnetonka, Minn. Imagine the monopolistic power they will yield, if this indeed comes to pass.

Doctors are Feeling the Merger Pain

With recent healthcare reforms, as well as other economic factors and trends (a change to the 2011 capital gains tax which makes selling a profitable choice for many insurers), we can expect to see more of these health insurers and hospital mergers. And, like little kids having to constantly adapt to the whims and decisions of their parents, physicians will be left to figure out how to navigate even more tumultuous industry changes.

Industry experts are predicting that we will see major health plans buying up small regional insurers as many smaller companies opt out of the insurance business due to the capital required to comply with ever-changing regulations and the constant need to update technology. As these consolidations happen more frequently, consumers can expect to pay higher premiums, and physicians can expect to see more one-sided contracts offered to them on a ‘take it or leave it’ basis.”

They can also expect more difficulties in negotiating adequate reimbursement which will hinder their ability to provide quality medical care.

With more and more doctors dropping out of networks, it makes it more difficult to refer patients to quality specialists. Under certain mergers, doctors may even be told they need to join both networks. If they do not agree, their contracts can be canceled under an “all-products” requirement. Either way it’s a lose/lose scenario.

Small Practices Face the Same Challenges as Small Hospitals

Insurers often make the case that mergers are a good thing because they have the ability to increase efficiency and provide greater benefits to consumers. Theoretically that may be true, but experientially the opposite has been the case during the most recent mergers. CMS has recently posted a list of proposed insurance rates, and, after two years of relatively stable premiums, rates are looking like they will increase in 2016. And not by a little, but by double digit percentages for individual policyholders in almost every state.

These bigger health plans have greater market share and negotiating power when it is time to negotiate with hospitals. Hospitals are then forced to merge themselves so they have the power to deal with these bigger payers. Collaborating with others allows hospitals to strengthen their ability to provide exceptional care while being able to keep pace with the ever-changing requirements of health care reform.

Many physicians’ practices are facing the same challenges as these smaller hospitals, not only in providing higher-quality services, but in maintaining or upgrading infrastructure to meet reporting requirements. These challenges may force some practices to combine with others or ally with a hospital in order to stay in the game.

Read” A small Providers take on ICD-10 and other HealthCare changes”

An example of this kind of merger happened when multispecialty physician group IHA, which is made up of 150 doctors at 32 locations, recently announced it would consolidate with St. Joseph Mercy Health Systems, a seven-hospital system based in Ann Arbor, Michigan.

If the future holds more insurer mergers, physicians will face even more expectations for rapid improvements in patient care and will have to find an ally to partner with just to stay afloat.

Also, if this trend continues and insurers are indeed able to push up premiums and negotiate down physician contracts, would it nullify the gains (Affordable and accessible Healthcare for all), if any, made through the Affordable Care Act?

Share your opinions with us in the comments below.