Consolidation of Healthcare Services and Financing in Delaware: The Inherent Risk of Monopoly
By: Christopher Casscells, M.D.
Delaware is a small state, both by size and population. As our elderly population grows and the state’s economy shrinks, a larger percentage of our economy will be dedicated to healthcare because, necessarily, older people require more healthcare. None of this is disputable.
Delaware residents have limited choice of providers, especially of hospital systems: only Bayhealth, Beebe, Christiana and St. Francis are options. Christiana is dominant, and the others generally co-exist. Delaware’s certificate of need laws discourage further outside competition from entering the marketplace.
A predictable result of the implementation of the Affordable Care Act (Obamacare) is the trend of consolidation of healthcare providers, nationally. There are fewer and fewer independent practices, as they are bought up or driven out by the hospitals. Again, policy drives that result, as the hospitals are paid a larger premium by Medicare, Medicaid and private insurers for exactly the same service provided by an independent practitioner. So, the trend is toward a day when all healthcare is delivered by hospitals and their employees.
The issue looms large for Delaware patients. In most places, patients still have choices between competing large systems, and oversight is in place to screen for price-setting collusion between these entities.
Delaware’s size, both geographically and in population, limits those “remedies”. There is very limited choice of hospital and provider, especially, regionally, in some of our rural areas.
Additionally, in Delaware, there is limited choice of health insurers. The state is dominated by Highmark Blue Cross Blue Shield (BCBS), a Pennsylvania company that acquired BCBSDelaware over a decade ago. Highmark is effectively the only health insurance company in Delaware. Highmark manages portions of Delaware’s sizable Medicaid and Medicare patient population in addition to being the sole health insurance contractor for the State of Delaware, its employees, and retirees. The State is the largest employer in Delaware. Several other entities have tried to make a go of it, including Aetna, Principal, Coventry, Cigna, Care First, US Healthcare and United Healthcare, to name a few, but none has been able to compete. There should be competition, however, Delaware law requires a minimum of 3 choices of health insurer, but the Delaware Insurance Commissioner simply ignores the mandate.
And, even with multiple hospitals, our choices are shrinking. Increasingly, there are “collaborations” between Highmark and Christiana Care, Beebe and BayHealth. Delaware policy leaders need to take note. In Pennsylvania, Highmark ‘collaborated’ with the Allegheny Hospital System in PA before taking over and creating a vertical monopoly which successfully competes against other insurers, hospital systems and combinations. While a system like Pittsburgh’s UPMC in Western Pennsylvania might be able to compete with that large a competitor, Delaware has no other competitive choices. If left unchallenged, a vertical monopoly would worsen an already less than ideal situation.
There are those that argue that such a collaboration would lead to economies of scale with better access, lower cost, and higher quality. But those metrics have been the goal of the Delaware Healthcare Commission for well over a decade, and the only result has been the steady worsening of all three metrics. According to Forbes Advisor, Nov. 2022, Delaware already has the 8th highest cost per capita of healthcare in the nation. Our wait times in Emergency Departments are dismal, and securing an appointment with a provider is increasingly difficult. Those advocates need to be asked to account for these results, in spite of the increasing consolidation of the healthcare marketplace.
Regardless of the intentions of those responsible for the oversight of the state’s health policy, the Department of Health and Human Services, the Insurance Commissioner, and the Healthcare Commission, they must be more vigilant to protect the options patients have for care.
History has demonstrated consistently that monopolies in a service industry are ill-advised. Delaware policy makers need to prevent further consolidation, bring more insurance options to Delaware citizens, and prevent a vertical monopoly that will adversely affect precisely those goals our policy makers are seeking to achieve.
Dr. Christopher Casscells, MD, Policy Director, Center for Health Policy, Caesar Rodney Institute. Dr. Casscells was one of Delaware’s leading Board-Certified Orthopedic Surgeons. He graduated from the University of Virginia School of Medicine and did his residency at Yale-New Haven Hospital. After a distinguished 30-year medical career, Dr. Casscells retired from practicing in January 2020.