Saturday, August 11, 2007

Careful What You Wish For...

The Southwest Ohio health care market has certainly seen its share of discord the past few years. And thanks to The Industry Radar, we have this news from the Dayton Business Journal:

"An alliance between the Health Alliance -- minus two members -- and Premier Health Partners could be in the works...the Health Alliance and/or Jewish Health System are exploring a merger or affiliation with the Dayton system."

Gee, didn't see that one coming.

The reality is, as problematic as the health insurance market is hereabouts, it's really no more dysfunctional than the health care market. And, as we've pointed out numerous times, the latter drives the former.

If I had to guess (and heck, that's the beauty of blogs: we get to opine all the livelong day), I'd say that this bodes more seriously for the Cincinnati market than the Dayton. Why, you ask? Well, Premier has recently signed relatively long-term deals with the two 800 pound insurance gorillas (guerillas?), Anthem and UHC. But the Cincinnati market is in flux; it's a much larger market, as well, serving southern Ohio as well as northern Kentucky.

The truly interesting geographical wild card here is Middletown (so-called because it's roughly halfway between Dayton and Cincinnati): Premier is based in Dayton, but "owns" Middletown Regional (MRH), which also serves the northern suburbs of Cincinnati.

The two outlyers (Christ Hospital and the St. Luke's) left the Cincinnati-based Health Alliance earlier this year, presumably hoping to make up for lost contracts with increased revenues. Looks like they may have miscalculated.

Don't you just hate when that happens?

It's all very incestuous.

The two larger communities continue their inexorable crawl towards each other, which may ultimately leave MRH in an enviable position. Of course, Christ and St Luke's are now calling foul, but it seems to me that their own voluntary exile from the Health Alliance mitigates any such claim. The real winners here may be us consumers, as competition drives down costs.

On the other hand, the real losers here may be us consumers, as former competitors link up, squelching competition.

We'll keep you posted.
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