Jan. 15--Most people pick their hospital because it's nearby in an emergency or, more often, because their doctor practices there. It's not so much a choice as a foregone conclusion. Until it isn't.
Until, that is, certain hospitals charge too much, and insurers balk -- and patients lose access to their preferred doctors and hospitals.
This isn't some theoretical exercise from Econ 102. Recall what happened to thousands of people Jan. 1. The state's dominant insurer, Blue Cross and Blue Shield of Illinois, bounced several top Chicago hospitals -- including Northwestern Memorial, Rush University Medical Center and the University of Chicago Medical Center -- from one of its most popular Obamacare individual (as opposed to group) insurance plans. Blue Cross said those hospitals charged too much and wouldn't reduce prices enough to make its premiums affordable to consumers. So the hospitals are out of the Blues' comparable plan for 2016.
And the affected consumers are out of luck. The struggle between clout-heavy Blue Cross and clout-heavy hospitals left thousands of Illinoisans scrambling to find new coverage with new providers.
The episode also left thousands of other Blue Cross customers in small and large business groups to wonder: Are we next? Could we lose access to our doctors, our hospitals, because insurers and hospitals can't make a deal on pricing? When these elephants battle one another, are we patients the grass they trample?
That's the backdrop for the latest drama in Chicago's hospital market: a high-stakes showdown between the Federal Trade Commission and two chains that seek to merge. Advocate Health Care, the largest chain in Illinois, runs 12 hospitals, including facilities in Park Ridge, Libertyville, Downers Grove, Elgin and Oak Lawn. NorthShore University HealthSystem, the dominant North Shore provider, runs hospitals in Evanston, Skokie, Glenview and Highland Park.
The chains say combining forces will lower costs for insurers and thus consumers, boost efficiency and improve care.
But in a unanimous vote last month, the Federal Trade Commission, three Democrats and a Republican, moved to block the merger. The FTC says the combined entity would gain leverage to hike prices and would lose the drive to innovate: a lose-lose for patients and bill payers.
In April, a federal judge will hear arguments on who has the more persuasive case. We hope he starts from the premise that Advocate and NorthShore are private entities that deserve freedom to make decisions about their business model(s) that time will prove to be smart or dumb. The burden of proof ought to fall heaviest on the government agency that seeks to prohibit those decisions. Example: The hospitals will argue, compellingly and perhaps convincingly, that the FTC gerrymandered the North Shore portion of the Chicago market to make it appear that the merged company would have fewer competitors than, in fact, it would. How will the FTC answer that?
