That payor-provider gap? It’s becoming an abyss.
At this point, it’s clear that the U.S. healthcare system is simply breaking down — with billions of dollars being funneled toward insurance company shareholders, while hospitals struggle and patients forego care.
Need proof? Becker’s Payer Issues outlines it in black and white. The article, aptly titled ‘The house always wins,’ shows how insurers like UnitedHealth Group and Elevance Health have seen record profits (28% and 7% higher than this time last year, respectively), while health systems like HCA and Tenet saw profits fall dramatically compared to the third quarter of 2021.
The numbers speak for themselves.
Third-quarter payor profits:
- UnitedHealth Group: $5.3 billion, up over 28%
- Cigna: $2.8 billion, up over 70%
- Elevance Health: $1.6 billion, up over 7%
- Humana: $1.2 billion, down 20%
- Centene: $738 million, up over 26%
- Molina: $230 million, up over 60%
- CVS Health: $3.4 billion in losses, attributable to legal settlement
Third-quarter provider profits:
- HCA Healthcare: $1.13 billion, down over 50%
- Universal Health Services: $182.8 million, down over 16%
- Tenet Healthcare $131 million, down over 70%
- Encompass Health Corporation: $45.4 million, down over 54%
- Community Health Systems: $42 million in losses, down over 137%
- Trinity Health: $1.4 billion in 2022 losses, down over 135%
Our healthcare system is built on the idea that hospitals and clinicians provide healthcare and, for the majority of consumers, insurance companies manage the payment of those services.
While part of that is ‘managing care,’ or making sure that the services patients receive are necessary and efficient, another part is making sure patients are protected from the serious costs related to major healthcare events (i.e., no one expects open heart surgery to be something cheap to provide, and that’s why we carry insurance).
But like a casino is designed toward profits and the player goes home in debt, in many healthcare situations, the incentives are simply structured for patients to pay, hospitals to lose, and insurers to profit.
The market has gotten so scrambled that publicly traded insurance companies are incentivized to take that ‘care management’ to the next level — slashing payments, denying claims, and forcing providers out of network. And the evidence is in the earnings.
If this payor provider gap continues to widen, there’s a lot at risk for hospitals and their patients. More hospitals will likely close, leaving their patients with less access to the care they need. Alternatively, hospitals will consolidate to preserve care and combine resources, but even that may only be a temporary solution if payors continue to use their considerable leverage to profit off the backs of providers.