Hospital consolidation has crushed everyone’s bank accounts and has led to the rise of anti-competitive contracts that force insurers and employers to accept take-it-or-leave-it terms.
A group of citizens in Connecticut is suing Hartford HealthCare, alleging the large hospital system has amassed monopoly power “to extract higher prices from insurers, employers, and patients.”
Why it matters: This is another class-action lawsuit arguing hospital consolidation has crushed everyone’s bank accounts and has led to the rise of anti-competitive contracts that force insurers and employers to accept take-it-or-leave-it terms.
“Even if you don’t live in Connecticut, you should be worried about [these hospital behaviors], because you’re paying for this through your insurer,” said Ellen Andrews, head of the consumer advocacy group CT Health Policy Project.
Driving the news: People with commercial insurance in Connecticut allege Hartford HealthCare, a $5 billion hospital system, has scooped up hospitals throughout the state and rolled that leverage into insurance contracts, including:
- “All-or-nothing” contracts. Insurers exclude hospitals from networks if hospitals have lower quality or higher prices, but Hartford allegedly required insurers to include all of its hospitals — including more expensive ones in more competitive areas — in networks.
- “Anti-steering” contracts. Insurers may entice people to go to lower-cost or higher-quality hospitals by making out-of-pocket costs lower for those facilities, but Hartford allegedly mandated insurers not to make those kinds of “steering” provisions (or to make them weaker).
The other side: Hartford HealthCare said in a statement the lawsuit lacks merit, and “the allegations misrepresent the many ways Hartford HealthCare is working to transform health care.”
The big picture: “All-or-nothing” and “anti-steering” contracts have been common for several years — which the Wall Street Journal helped expose in 2018 — and antitrust authorities have taken notice.
- In 2018, Atrium Health in North Carolina agreed to a settlement with the federal government to resolve allegations the hospital system forced insurers not to steer patients away from its facilities.
- In 2019, Sutter Health settled with California over allegedly forcing insurers to include all Sutter hospitals and clinics in networks.
- Last year, a class-action lawsuit filed against HCA accused HCA’s Mission Health system of imposing all-or-nothing contracts.
- “We’re in heavy catchup mode,” said Barak Richman, a health care antitrust expert at Duke University.
Between the lines: Some members of Congress proposed banning these types of contracts in 2019, but legislation hasn’t gone anywhere.
What to watch: Most metropolitan areas have consolidated hospital markets, so it’s possible more of these lawsuits will pop up.
