Why are so many involved in the business of health care? because that were the money is.
Here are some examples infrequently mentioned or reported which contributes to why our health care system is so out of control and as costly as it is. In South Florida alone over the last several months mergers and acquisitions have occurred among health insurance companies. While many politicians and national leaders advocate competition among insurance plans as a way to reduce health care costs, the reality of it is that there are decreasing numbers of health insurers which in the long run, will increase health care costs by limiting choices.
July 2007, Coventry Health care, a Maryland based company, acquires Vista health plans in S. Florida, with 295,000 members and annual revenues of 1.0-1.2 billion, for $685 million cash.
In October 2007, the 25, 700 member Leon Medical Center was bought by Tennessee based Medicare Advantage, managed care provider, HealthSpring for $355 million cash and 2.7 million shares of HealthSpring common stock.
October 2006, Continue Care Corporation acquires Miami Dade Health Centers for $5 million in cash and 20 million shares of stock.
February 2005, Humana acquires CarePlus Health Plans of Florida, a Medicare advantage HMO, with approximately 50,000 members in S. Florida for $450 million.
You need to ask yourself, how do these companies plan on making profits when they are spending millions in purchases and consolidations.
You make money and profits by: a) raising premiums, b) decreasing and eliminating costs, typically by reducing or denying services or payments, and c) a combination of both.
Likewise, you need to remember that the Medicare managed care plan, Medicare Advantage, passed into law under the Medicare Modernization Act of 2003, pays these HMO's a higher reimbursement for each Medicare member enrolled. Thus the more members, the more money these corporations make and higher profits for share holders.
Start to get the picture?