WSJ: Secret hospital contracts prevent healthcare savings

Healthcare costs continue to balloon in the United States, and secret contracts between hospital systems and insurers may be playing a big role in keeping those costs up.

Large hospital systems are leveraging their contracts with insurers to “protect their turf and block efforts to curb healthcare costs,” according to a report from The Wall Street Journal. Through strict language in contracts between payers and providers, hospitals are actively excluding the use of less-expensive rivals and adding extra fees to boot.

These opaque methods may be a driver of higher spending, according to the WSJ. Restrictive contracts are causing major obstacles for big companies looking to lower healthcare costs for their own employees, including Walmart and Home Depot, the report found. Major hospital systems, from Johns Hopkins to NewYork-Presbyterian, participate in such restrictive contracts that give them a leg up.

“If you’re the single hospital system in an area, you essentially can set your price, because you’re a monopoly,” Patrick Conway, the chief executive of Blue Cross and Blue Shield of North Carolina, told the WSJ. “We literally have to have them in network.”

Hospital care accounts for more than $1 trillion in healthcare spending annually, and prices grew about three times the rate of inflation from 1960 to 2016. The outsized spending is particularly concerning when contracts are so private.

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