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Like officials in the Obama administration, Sonenreich argues that price transparency among hospitals of similar quality will lead to lower healthcare costs. Without naming names, he accused some South Florida hospitals of driving up costs by leveraging their market position to extract higher fees from private health insurers.
But by charging higher rates, Sonenreich said, these hospitals force private insurers to negotiate lower rates of payment with other hospitals for the same procedure.
“When you have a large hospital system that has leverage because of their location in the marketplace,’’ Sonenreich said, “they’re able to command much higher payments from insurance companies than hospitals that do not have that type of market clout.”
That leads to higher costs for employers and higher premiums for employees, he said.
Ullmann said health insurance companies are willing to pay a premium to contract with providers favored by their members.
“They know the ones that patients in their member group are going to indicate or perceive they need,’’ he said. “Hospitals know that, and are able to negotiate better rates for themselves. It’s basically market power. If you have a need for something, the price negotiated is going to be higher.’’
If insured patients assume responsibility for a greater share of those costs, though, then their decisions — based on publicly available hospital prices — also will have a market effect, said Ullmann, the UM healthcare management professor.
“If this trend continues,’’ he said, “then that will start to put downward pressure on certain prices.’’
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