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Texas Small Businesses: Control Healthcare Prices and Regulate Hospital Consolidation

A survey of small business owners found that an overwhelming majority say hospital consolidation leads to higher prices and lower quality.

Texas entrepreneurs are feeling the pressure of increasing healthcare costs and are pushing the legislature to make changes that regulate hospital consolidation, control healthcare prices, and make health plans more flexible.

A survey of more than 1,015 small businesses from Small Business for America’s Future showed that business owners support more regulation of healthcare consolidation and price controls for services. This week, the 2023 Texas legislative session discussed HB 711, which would shift how employers build health plans and allow them to steer patients to more efficient providers within a system, tier providers based on cost and quality, and other measures to improve shopability.

 The small business owners’ perceptions about healthcare costs are born out in the data. Centers for Medicare and Medicaid Services data show that out-of-pocket spending increased for patients by 10.4 percent in 2021, higher than in the last three decades. The cost of monthly health insurance premiums also grew by 6.5 percent.

Consolidation is on the rise as well. According to research from Deloitte, the largest 10 healthcare systems in the U.S. control nearly a quarter percent of all hospitals. Between 2013 and 2018, the ten largest health systems saw revenue increase 82 percent from $505 billion to $918 billion, five times faster than the rest of the market.

“There is a lot of power on the payers’ side, not as much for small business owners,” says Dr. Erika Gonzalez, the co-chair of Small Business for America’s Future and past board chair of the San Antonio Hispanic Chamber of Commerce. “We have to accept the contracts that are given to us, and we have no real power to negotiate. HB 711 will help.”

In Texas, four in 10 respondents said that hospital consolidation in their communities has led to higher prices, fewer choices, longer wait times, and fewer services. An overwhelming majority (86 percent) say that federal and state governments need to intervene in consolidating healthcare systems, and 85 percent noted that consolidation has negatively impacted the availability and quality of healthcare services. Three-fourths of Texas small business owners say health insurance availability and cost have also worsened. Nine in ten respondents say hospitals unfairly charge high prices and need price regulation.

“Mom and pop business owners are being priced out of the ability to offer health insurance to their employees, and hospital consolidation and unfair pricing practices are a big contributor to the problem,” said Gonzalez via statement. She is also CEO, president, and co-founder of South Texas Allergy and Asthma Medical Professionals and STAAMP Clinical Research in San Antonio. “The cost of healthcare is holding back their ability to invest in the growth and financial health of their businesses.”

Increasing healthcare costs are taking their toll on business growth as well. Nearly half of the national respondents say they have delayed growth opportunities because of insurance costs, and more than one-third said their inability to offer health benefits has made them less competitive.

Health Affairs article from 2015 looked at 15 common procedures and found that physician practice consolidation was significantly associated with higher prices. A 2019 study in the Journal of General Internal Medicine compared Blue Cross and Blue Shield of Texas patients who went to physician-owned groups and hospital-owned doctors and found the latter to be more expensive. The study found no difference in quality between the two groups and noted that expenses were due to hospital utilization. It also found higher hospital use by hospital doctors than independent physicians.

While consolidation regulation and price control have not been legislative priorities, Gonzalez and others are looking toward HB 711 to make the healthcare market more competitive and allow small business owners and large corporations to steer employees away from higher-cost health centers and make health plan contracts more transparent.

Gonzalez feels like momentum is building toward change. “I feel this movement is promising, as small business owners are starting to notice some of the things are going on and wanting to play a role,” she says. “They didn’t understand why the prices were so high, so we are ensuring they are informed. It is helpful that there is more recognition of the problem.”


Will Maddox

Will Maddox

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Will is the senior writer for D CEO magazine and the editor of D CEO Healthcare. He's written about healthcare…

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