Freestanding MRI clinics are being purchased by large hospital groups. Currently the freestanding, independent clinics typically charge significantly less than a hospital. However, once they are acquired, the price increases dramatically. Here is a prime example:

Behemoth Hospital Group purchases Small Guy Imaging. Once the acquisition is complete, SGI now has to carry the operational costs of a much larger group. When compared to We Stayed Independent imaging, the cost differences are extreme! (NOTE: Names have been changed to respect privacy, but the scenarios are true.)

We Stayed Independent vs. Small Guy Imaging

This is just a representative example of the price differentials between an independent medical imaging facility and a hospital-owned facility.  Obviously the numbers speak for themselves. But there is more to consider.

Patients with HSA accounts and high deductible accounts pay the full difference of the rates.  Patients that have met their deductibles still have to pay 10 – 30 % co-insurance, meaning they are paying 10-30% of the cost differential even after meeting their deductible.

Finally, this drives up healthcare costs across the board and payers (insurance companies and self-funded health plans) have to respond with higher member monthly premiums.  Thus, these increases in medical imaging costs impact any company with group employee benefits.

But here is the rub – insurance is not setting these rates. Medical providers are and with the cost of medical services continuing to go up, it is more difficult for a smaller clinic to stay in business. Therefore, it makes good business sense for them to sell to a larger hospital. Now we have major medical communities, rather than hospitals that are separate from clinics and surgical centers.

Insurance is Only Part of the Equation

The cost of health insurance is a by-product of the increasing costs of medical service. As those costs rise, the doctors, hospitals and medical facilities do not absorb the costs – the consumers do. Furthermore, ACA requires insurance companies to pay out 80-85% of their gross premium revenue in claims, thereby giving insurance companies a % cap on gross profit margins. The law does not cover, however, other cost contributors such as rising costs of prescription drugs, or malpractice insurance.

Don’t get me wrong, insurance companies are a contributing factor to our healthcare challenge, but not the entire problem. In fact, if you take all the insurance companies profit numbers and added it up, that extremely large number only pays forless than a week of healthcare in the United States. We have a whole other side to the equation that needs to be solved. It goes beyond employers paying for insurance.

Losing the Entrepreneurial Spirit

With large hospitals buying up practices and labs to gain a larger portion of the market, there is early data indicating the unintended consequence will be the decline of entrepreneurial spirit in the healthcare industry. Providers who sell to hospitals, will not have as much control, nor feel the empowerment of having their own practice. The end result may be they simply do not work as hard which ended up becoming one of the down falls of HMOs in the past.

If you add that to the continued decline of providers taking Medicare and Medicaid, simply because it is not profitable, now the consumers are in the hot seat again. There will be less opportunity for quality healthcare for those on Medicare and Medicaid programs simply because there are fewer providers who will take that risk. Once again, ACA ends up negatively impacting those the law was intended to help.

Fortunately, there are still positive options out there. Decoupling how providers are incented to ensure the best healthcare options is the reason we created The Empowered Advantage. There are ways to minimize and even negate some of the unintended consequences of ACA. Fortunately, you don’t have to navigate those rough waters alone. Our group health benefits specialists are well-versed in the nuances of ACA and are happy to answer your questions and address your concerns. Then you can focus on your business, keeping it running smoothly without being sidelined by the complexities of ACA.