,,,Highly Consolidated Market Poses Cost Control Challenges

Highly Consolidated Market Poses Cost Control Challenges


Publication Date: January 2001

Publisher: Center for Studying Health System Change

Author(s): Kelly Devers; Jon B. Christianson; Laurie E. Felland; Suzanne Felt-Lisk

Research Area: Health

Type: Report

Coverage: Michigan


In October 2000, a team of researchers visited Lansing, Mich., to study that community’s health system, how it is changing and the effects of those changes on consumers. The Center for Studying Health System Change (HSC), as part of the Community Tracking Study, interviewed more than 85 leaders in the health care market. Lansing is one of 12 communities tracked by HSC every two years through site visits and surveys. Individual community reports are published for each round of site visits. The first two site visits to Lansing, in 1996 and 1998, provided baseline and initial trend information against which changes are tracked. The Lansing market includes Ingham, Clinton and Eaton counties. One health plan and one hospital system now control much of Lansing's health care market. Blue Cross and Blue Shield of Michigan (BCBSM), the dominant plan, covers about 70 percent of commercially insured individuals. The dominant hospital system, Sparrow Health System, which was created by the merger of two local hospitals in 1997, now controls more than 60 percent of the hospital market. It also owns Lansing's second major health plan, Physicians Health Plan of Mid-Michigan (PHP).

Recent developments suggest that controlling health care costs in Lansing's highly consolidated market may be challenging. Since 1998, employers have been hit with double-digit health plan premium increases and have responded only modestly.