One Hospital System’s Abuse of Market Power

By September 6, 2019 Commentary

It has been clear for year that horizontal and vertical consolidation involving hospital systems benefits no one except the management of the consolidated entity.  An article by Axios examines one hospital system and its effect on a state’s health system and the consumers in that state.   (Axios post)   The system is the University of Colorado one, so supposedly non-profit and an academic medical center in addition.  Think that this system might have a mission dedicated to patient welfare.  Think again.  The system, through a series of mergers and acquisitions completely dominates the delivery of health care in Denver and much of the surrounding area, indeed the whole state.  Its operating margin, a basic measure of profitability, is 13.3% compared to a national average of 1.7%.  That is disgraceful–this is money that should be returned to Colorado consumers in the form of lower prices.  The profits aren’t coming from Medicare and Medicaid, which fix prices, but from commercial insurers, with one study estimating that the University of Colorado charges commercial payers 316% of what Medicare pays it, and those private plans in turn pass on the higher prices in the form of higher premiums. Colorado has the highest private health insurance costs in the country.  The hospital system is also spending less on charity care, so it’s not using the extra profits to benefit poor Coloradans.  And what does the University do with all this extra money it is sitting on–build overly expensive facilities and overpay management, including millions in salary and benefits to its supposed leaders.

I could go on and on and cite other articles I read on this system, but it all just makes me sick to my stomach.  The only thing that makes me sicker is that the idiot governor of Colorado and its insipid legislature haven’t done a thing to address this problem, despite studies by state agencies detailing the problem.  Maybe campaign contributions and lobbying have something to do with that.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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