The Denver provider market is huge, and it is at a tipping point currently with rates and increases due to the economic development in the area. Some of these providers are merging with others, but there are strict regulations to this. Read the article below to find out more about this “tipping point”.
Health systems and physician groups have dominated the Denver healthcare market in recent years, but a new study indicates that employer-purchasers and health plans are poised to disrupt that dynamic.
Supported by existing legislation, activism from local businesses, and the efforts of Gov. Jared Polis, the Denver market is at a ‘tipping point,’ according to a Catalyst for Payment Reform (CPR) and the Colorado Business Group on Health (CBGH) report released Thursday morning.
The study specifically referenced the RAND report from May which found that payers were paying rates to providers well above Medicare levels, noting that employers have an opportunity to pressure insurers to engage providers in contract arrangements that better align with care rendered.
Researchers believe that payment reform is achievable in Denver, suggesting six policy recommendations to business groups, lawmakers, and insurers, including the expansion of price transparency measures and promotion of benchmarking prices relative to Medicare.
Corralling healthcare prices has been a primary issue in Colorado this year, with the state most recently pursuing a reinsurance program that Polis expects to lower premiums by 18%.
The study found that four major health systems, HCA Holdings, Centura Health, UC Health, and SCL Health, accounted for 85% of patient admissions in 2017. On the Herfindahl-Hirschman Index, this level is considered “moderately concentrated” but the report highlights that it also means the market is “concentrated enough to stifle price competition.”
While providers have concentrated in the market through continuous merger activity, the study found that insurers are governed by strict regulations. The result has been Coloradans facing 13% higher prices compared to the national average and 5% high utilization rates.
Two of the recommendations offered by the study were to align two-sided risk arrangements with Medicaid and the Polis-Primavera “Roadmap to Affordability,” the governor’s strategic initiative to make care more affordable, as well as to implement benefit designs to “encourage consumers seek higher value care.” The study also urges that employer-purchases to pursue value-oriented programs that hold providers accountable to the listed targets.
However, in an interview with HealthLeaders earlier this year, Centura Health CEO Peter Banko said the system was going to “pause on the mad rush” to value-based care models, citing the direction the market was taking on the issue.
As highlighted in the RAND report, CPR and CBGH believe that building on purchaser momentum through a statewide purchase cooperative can be an effective method at changing the market dynamics in Denver.
Similar to the Employers’ Forum of Indiana, an employer-led healthcare coalition which collaborated on the RAND report, the Peak Health Alliance, a Summit County-based purchaser cooperative, has sought to combat rising healthcare prices in the Denver area. The report states that Peak Health, which represents 6,000 covered lives, has already negotiated a “very aggressive” reduction in rates with Centura.
Bob Smith, MBA, executive director of CBGH, said that the report gives employer-purchasers “the tools to make changes” to the Denver healthcare market and stem the tide of rising prices.
“Healthcare costs, primarily driven by high prices and seemingly unwarranted increases, are edging out salary growth and economic development,” Smith said in a statement. “These trends are taking a toll on every employer from school districts to manufacturers and are simply not sustainable.”
Smith urged lawmakers to act on the report’s suggested reforms but also said that employers now have “the responsibility to act.”
Original article published on healthleadersmedia.com