Beaumont mega-merger plan could boost Metro Detroit patients' costs

A new dissection of Beaumont Health's proposed deal with a Grand Rapids-based hospital network echoes earlier observations about its impact on medical costs.

"The proposed megamerger ... could result in higher health care prices in metro Detroit if the newly combined system uses its big size to negotiate bigger payments from Michigan insurance giant Blue Cross and other insurers," says the first sentence of a Detroit Free Press analysis by JC Reindl (paywalled).

The pending combination with Spectrum Health would "create the largest hospital system in the state by far," he adds.

And that size could give the new combined system stronger negotiating leverage with Blue Cross Blue Shield of Michigan than either Beaumont or Spectrum have on their own, according to some health care experts and research studies.

Others raised that prospect after last month's proposed merger news, first reported at Deadline Detroit by Eric Starkman on June 16.

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Health industry consultasnt Allan Baumgarten of Minneapolis, who tracks Michigan's market, told The Detroit News a cross-state hospital system could lead to increased prices. From the paper's coverage, also subscribers-only:

Larger health systems have greater negotiating power with insurers, and those costs could get passed along to employers, he said. ...

Most research finds that such mergers ... give the new larger health system "more market power that they use to raise prices — which mostly falls on employers and their group plans," Baumgarten said.

Similarly, Dustin Walsh posted at Crain's Detroit Business that "experts remain skeptical on who would see those [potential cost] savings."

On Tuesday in the Freep, Reindl sketches the potential impact on consumers:

Never before has Blue Cross had to negotiate with a hospital system as large as the proposed $12.9 billion Beaumont-Spectrum combo: 22 hospitals, 305 outpatient sites, 64,000 employees, plus Spectrum's own insurance company Priority Health that enrolls over 1 million people.

A system of that size and scale could potentially muscle higher prices out of The Blues, as well as insurers with smaller Michigan footprints.

For patients, higher hospital prices mean bigger out-of-pocket payments for meeting deductibles, higher health insurance premiums and even lower wages at their everyday jobs.

The in-depth analysis quotes Spectrum president and CEO Tina Freese Decker, the combined system's pending leader. Reindl also writes:

A spokesperson for Attorney General Dana Nessel said her office is still determining whether a formal review of the Beaumont-Spectrum deal is required.