Payors vs providers: the bargaining continues

The alternatives to agreement determine the terms of agreement:

... insurers contend that in recent years big hospital systems have been buying up smaller medical centers and using their dominance in a region to demand big rate increases. America's Health Insurance Plans, a trade organization, points to data showing hospital markets are 47% more concentrated than they were 13 years ago....

In a first-quarter earnings report to Wall Street analysts, WellPoint's Ms. Braly told investors that her company is getting support for more aggressive contract negotiations from its employer customers, who want to keep their own costs down.

Empire's Mr. Wagar says customers are telling him, "No. This is enough," while Cigna Inc. is enlisting its customers to lobby hospitals with which it is in disputes, to push for lower prices. "We will have a large employer go to a facility and say 'these are my numbers, I'm not going to pay this,' " says Cigna chief executive David Cordani.

Several hospital executives counter that they have no choice but to ask for more money. "We're looking for double-digit increases in reimbursements," says Vin Capece, the COO of Middlesex Hospital in Middletown, Conn., a 210-patient bed center with $350 million in annual revenue. "That's being driven by growing Medicaid numbers. We've got this growing uncompensated care issue."