Austin Frakt, in an interesting and somewhat lengthy post, talks about a medical arms race for hospitals—in the past they used to compete on technology and amenities rather than price; naturally, the price went up. The HMO era helped slow that trend, with insurers beginning to show more market power. Frakt worries: “ As hospitals continue to consolidate and integrate with other providers (e.g., as encouraged by the ACO movement), I wonder if the medical arms race will return.”
It’s not hard to see the arms race escalating; if you’ve been reading recently, you may have noted stories about insurers getting into care and hospitals starting mergers and building. So I’d guess both sides are trying to avoid bringing a knife to a gunfight—though it remains to be seen who has the bigger guns.
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