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Spotlight from the WSJ this week on a phenomenon that's not new but may be entering a rocky new phase: face-offs between big health care provider systems and big insurers that can't agree on contract terms.
To slightly understate the case, the past four years have been unusual ones for the health care system. Providers were stretched both financially and psychologically during the worst years of the pandemic and are now dealing with the aftereffects, like a burnout-induced workforce crisis. Meanwhile insurers, whose margins remained pretty healthy during those tough years as elective care dropped off but premiums largely didn't, are now dealing with the return of service utilization and the perennial impulse to push back on provider price increase requests. Deals between these two tend to be on a multi-year basis, so while inflation has subsided for the rest of us, it may well be a "current" reality for a provider system still operating under a contract negotiated a few years ago (though presumably a smart/powerful provider system had some degree of inflation protection for its prices built into its contracts). So in contract renewals today providers are looking to make up for lost time--er, revenue--and deal with wage demands in an industry many people simply don't want to work in anymore. And insurers are stretched by more people, including seniors in Medicare Advantage plans, getting care these days as they, too, make up for lost time. All while everybody else wants both sides to keep a lid on health care costs. That's a recipe for a bloody negotiation.
This is the dark side, though an inevitable and not-really-unintentional reality, of relying on negotiations between private companies and provider network development as the market mechanism for checking rising health care prices. Sometimes the negotiators have to throw their weight around in ways threatening to patients.
That aside, these fights--or rather the scale of their disruptiveness to ordinary people caught in the middle-- are arguably more a symptom of a corporate America increasingly populated by behemoths. This sort of thing isn't unique to health care; for example, it periodically shows up in public fights between media companies that spill over and impact consumers (e.g., "Disney and Charter Communications strike deal, ending blackout for Spectrum cable customers"). But obviously losing access to your doctors or hospitals is a higher-stakes proposition than losing the Disney Channel.
‘They’re Freaking Out:’ Letters Warn Patients They Risk Losing Their Doctor
To slightly understate the case, the past four years have been unusual ones for the health care system. Providers were stretched both financially and psychologically during the worst years of the pandemic and are now dealing with the aftereffects, like a burnout-induced workforce crisis. Meanwhile insurers, whose margins remained pretty healthy during those tough years as elective care dropped off but premiums largely didn't, are now dealing with the return of service utilization and the perennial impulse to push back on provider price increase requests. Deals between these two tend to be on a multi-year basis, so while inflation has subsided for the rest of us, it may well be a "current" reality for a provider system still operating under a contract negotiated a few years ago (though presumably a smart/powerful provider system had some degree of inflation protection for its prices built into its contracts). So in contract renewals today providers are looking to make up for lost time--er, revenue--and deal with wage demands in an industry many people simply don't want to work in anymore. And insurers are stretched by more people, including seniors in Medicare Advantage plans, getting care these days as they, too, make up for lost time. All while everybody else wants both sides to keep a lid on health care costs. That's a recipe for a bloody negotiation.
This is the dark side, though an inevitable and not-really-unintentional reality, of relying on negotiations between private companies and provider network development as the market mechanism for checking rising health care prices. Sometimes the negotiators have to throw their weight around in ways threatening to patients.
That aside, these fights--or rather the scale of their disruptiveness to ordinary people caught in the middle-- are arguably more a symptom of a corporate America increasingly populated by behemoths. This sort of thing isn't unique to health care; for example, it periodically shows up in public fights between media companies that spill over and impact consumers (e.g., "Disney and Charter Communications strike deal, ending blackout for Spectrum cable customers"). But obviously losing access to your doctors or hospitals is a higher-stakes proposition than losing the Disney Channel.
‘They’re Freaking Out:’ Letters Warn Patients They Risk Losing Their Doctor