Insights On Provider Consolidation And Narrow Networks

Law360, September 26, 2017

In the Law360 article “Insights On Provider Consolidation And Narrow Networks,” Managing Principals Samuel Weglein and Dov Rothman discuss two recently published studies which yield results that they believe could have important implications for antitrust enforcement.

The first article they reviewed, “Physician Practice Consolidation Driven By Small Acquisitions, So Antitrust Agencies Have Few Tools To Intervene,” details a study by Cory Capps, David Dranove, and Christopher Ody that found sizeable increases in physician practices across the United States – largely as a result of many small transactions. Because these transactions do not involve sizeable impacts on market concentration, they often go unnoticed by regulators. Dr. Weglein and Dr. Rothman note that the article mentions a number of reasons that Federal antitrust agencies are ill equipped to address this trend. Ultimately, Dr. Weglein and Dr. Rothman concur with the authors' conclusion that additional research is needed on the competitive effects of piecemeal consolidation.

In reviewing the second article, “Narrow Networks On The Health Insurance Marketplaces: Prevalence, Pricing, And The Cost Of Network Breadth,” by Leemore Dafny, Igal Hendel, Victoria Marone, and Christopher Ody; Dr. Weglein and Dr. Rothman recount the study's research on the relationship between network breadth and premiums. The study found that narrow-network plans offered on Affordable Care Act exchanges were, on average, 16 percent less expensive than plans with broad networks. Dr. Weglein and Dr. Rothman relate this to recent Department of Justice scrutiny of anti-steering practices in health care markets, and caution that vertical conduct that has the potential derail the emergence of competing business models in insurance markets may warrant continued scrutiny.


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