The effectiveness of employers' cost-control tactics can be limited by local market hospital concentration, which forces employers to accept the prices that hospitals charge.
Despite their prevalence, large self-insured employers lack power to effectively negotiate hospital prices, according to a new study reported in the American Journal of Managed Care. According to the researchers:
- There is no evidence that greater employer market power is associated with lower hospital prices in the employer-sponsored insurance markets.
- Employer coalitions would need to enroll a considerable number of employers to have sufficient market power to negotiate with hospitals.
Self-insured employers may consider building purchase alliances with state and local government employee groups to enhance their market power and lower negotiated prices for hospital services.
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