alt Hacker News>United Health Insurance has a profit cap, it’s a % of revenue. Sunshine Hospital has no cap. So Sunshine Hospital charged United Health Insurance X$ and that profit rolls up to United Health Group.
That doesn't really work as a strategy unless UHI cornered the insurance market within a given region, otherwise they'd lose business to competing hospitals. You might then say "hospitals aren't competitive, they're (regional) monopolies!", which might be true, but if that were the case, you'd expect them to raise prices anyways. They're profit maximizing companies after all, not operating out of altruism.
Uhh...? We know for a fact that this is how it works.
It's actually far more insidious.
The payer will have non-owned providers on their network, and by virtue of processing those claims they will understand a lot about the provider. They use this info to decide which providers to acquire. If the provider declines acquisition, the payer will use their member population (i.e. customers/patients of the provider who are covered by the payer) as leverage in negotiations against the provider, effectively crippling their business.
Once a practice is sufficiently maimed, they come back with another acquisition offer, and ta-da, the big player gets bigger.
Yes, all of this only works if the payer is large relative to other payers. There was a period of history where this was a caveat, now it's just an observation about history. Now, there is 1 or 2 mega-players in each region. They've divvied up the country into their own territories and will extract rent henceforth.
It's very important to understand that this model also eliminates all incentives to reduce costs of care. There is not a single player in the entire ecosystem who is incentivized to reduce cost of care except patients, but even there, most patients' health insurer is selected by their employer. Then what is an employer going to do? Select a health plan that doesn't have any local healthcare providers?