While officials of West Michigan’s Spectrum Health and Beaumont Health in the Detroit area prepare to submit their merger to Federal regulators, some health policy experts question whether the “marriage” will be good for consumers’ wallets. Most of the concern stems from predictions that hospital costs paid by insurance companies in Beaumont’s Detroit area facilities may be driven up to match already higher costs insurers pay to Spectrum in West Michigan.
According to the critics, Spectrum collects higher charges for the same hospital services on the West side of Michigan because it enjoys a significantly larger market share (i.e., it has fewer, weaker competitors) than Beaumont has in Southeast Michigan. Beaumont is said to compete with at least six other health systems in and around Detroit.
One of the unusual aspects of the Spectrum-Beaumont merger is that the two systems do not presently compete geographically or overlap in service areas. While the combination would create the largest health system in Michigan, its top leadership says that’s really not the issue, or the goal.
Tina Freese Decker, Spectrum CEO told the Detroit Free Press in an interview that it’s not about being the biggest–but about quality of service:
“This integration is not about size or being the biggest, but about developing the scale necessary to make the shift to value-based care and transform health for all of our communities across the state. Since we are an integrated health system, a health (insurer) and a care provider, we can create and deliver innovative value-driven products and services to our communities and employers.”
Freese Decker refers to Spectrum’s owned and operated health insurer, Priority Health, which some believe is the driving force in the merger. The theory goes that Priority will be in a stronger position to compete with the dominant, much larger Michigan Blue Cross after the Spectrum-Beaumont merger. Freese Decker told the Free Press the the way of the future is for health care providers and insurers to be on the same team, working for the patient’s best interest:
“Priority Health is an integral part of our not-for-profit integrated health system and our value journey. So together, we can implement innovative products with physicians and employers focused on value and reducing total cost of care. We are very excited to partner with even more physicians in the area to help people be healthier. And because Priority Health is a statewide health plan, we look forward to further partnerships with employers. ”
Freese Decker will be the CEO of the combined Spectrum-Beaumont health system when the merger is effected, according to the official announcement last month.
