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Hospitals' Negotiating Leverage with Health Plans: How and Why it Changed?

Feb. 21, 2003
Health Services Research, 38:1, Part II (February 2003), pp. 419-446
Kelly Devers, Lawrence P. Casalino, Liza Rudell, Jeffrey Stoddard, Linda R. Brewster, Timothy K. Lake

Findings suggest that many hospitals’ negotiating leverage significantly increased after years of decline. Today, many hospitals are viewed as having the greatest leverage in local markets. Changes in three areas - the policy and purchasing context, managed care plan market, and hospital market - appear to explain why hospitals’ leverage increased, particularly over the last two years (2000-2001).

Hospitals’ increased negotiating leverage contributed to higher payment rates, which in turn are likely to increase managed care plan premiums. This trend raises challenging issues for policymakers, purchasers, plans, and consumers.

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The Center for Studying Health System Change Ceased operation on Dec. 31, 2013.