Consolidation Leaves Health Care Information at a Premium

Controversial health care consolidation is an issue that business reporters can expect to see often in the future. As the industry continues to shrink, reporters face the challenge of providing readers with the information they want.

UnitedHealth Group Inc., the country's second-largest health insurer, recently said that it will buy PacifiCare Health Systems Inc. for $8.1 billion in cash and stock. This kind of consolidation can mean major changes for UnitedHealth's and PacifiCare's more than 26 million members. It also means a lot for stockholders of the companies.

Many in the financial sector think deals between health care companies look great because of cost cutting and future earnings gains. However, medical associations argue that just because something is good for Wall Street doesn't mean it works for Main Street.

Readers look at this issue from business, consumer and employee standpoints. For the business angle, reporters can first collect all available details of the proposed deal, including stock and cash exchanges from the companies, then talk to health care and insurance industry analysts for the basic economic impact of the acquisition.

Consumers will be concerned about how consolidation will affect their health care choices. Details about potential changes in coverage plans are what readers really want to know, according to Victoria Colliver, a reporter at the San Francisco Chronicle. But, she says, "There is a pretty long timeline for this deal and the information is not all out there yet."

This creates a challenge for reporters. Since companies are often tight-lipped about the inner workings of deals, or details are still unknown, the future is left to speculation.

"As a reporter, you have to decide how much weight to give to speculators," and company spokespeople, Colliver says.

Consumer groups in the health insurance market are "quick to criticize the impact," she says. Regulatory agencies, another group that will often have a comment on an acquisition, may raise concerns about less competition, which means higher prices for consumers despite the company's cost-cutting claims. They also worry about a diminished choice of coverage options, doctors and hospitals for patients.

For employees, job security is a big issue that reporters need to explore. Will those cuts in cost mean layoffs down the line? Plus, in past consolidations, executive compensation has been a big part of the story.

Colliver recommends looking to similar cases in the past to predict what may happen with the consolidation. For instance, a number of reporters looked at Anthem Inc.'s purchase of WellPoint Health Networks Inc. last year to provide a look at how regulators may treat this deal.

Still, it's almost impossible to predict changes when it comes to health insurance coverage. "You really have to look at the market and see what is going on," says Merrill Goozner, former business reporter for The Chicago Tribune and Crain's Chicago Business and author of The $800 Million Pill: The True Cost of New Drugs.

Colliver thinks that readers understand that reporters don't have all the answers. So sometimes, she says, it's just about telling them what you know until you get the full story.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism