One Health Hawaiʻi: What the Evidence Shows and What the Applicants Must Prove

The evidence on hospital-physician integration points to higher costs and inconsistent quality gains. Hawaiʻi should not approve common control between HMSA and HPH without proof of a public benefit.

HHTF Staff · 2026-09-24

EVIDENCE REVIEW | VERSION 1.1 | SEPTEMBER 15, 2026

Prepared for public and regulatory review by Esther Y. Smith, MD, Vice President, and David Isei, MPH, MAOL, PMP, Executive Director

1. The decision Hawaiʻi is being asked to make

On the current public record, the evidence does not establish that One Health Hawaiʻi would produce a net public benefit sufficient to justify common economic control between Hawaiʻi's dominant commercial insurer and a major delivery system. The Hawaiʻi Healthcare Task Force therefore recommends that no approval issue on this record. Before any approval, HMSA and Hawaiʻi Pacific Health would need to publish which benefits require common control and what those benefits are worth. They would also need to disclose a savings model net of the new structure's costs for independent review, accept enforceable protections for providers outside the affiliated system, and secure a pre-affiliation baseline while the organizations remain separate. Whatever happens to this transaction, the Legislature needs to pursue a primary care spending floor and dedicated health-insurance regulatory leadership as market-wide reforms. [5,6]

Table 1. Findings that govern the present recommendation

Finding Evidence Significance

National cost evidence Nineteen of 26 cost studies in the Harris review associated hospital-physician integration with higher costs. Satiani found price increases in 13 of 14 studies. [5,30] The research record is adverse, not evenly divided.

GAO synthesis GAO found higher commercial prices and traditional Medicare spending, with quality unchanged or worse. One reviewed study found office-visit prices 17% higher after consolidation. [6] The claimed efficiency gain must be proved, not presumed.

Insurance market HMSA held 66% of the combined commercial market in the AMA's January 2024 estimate; Hawaiʻi's HHI was 4,890, third highest nationally. [14] The proposal begins in an already concentrated purchasing market.

Workforce capacity The 2026 workforce report estimated a statewide shortage of 833 physician FTEs, or 22.6% of need. Hawaiʻi County was 43% short and Maui 41% short. [15] Loss of independent capacity is harder to replace on neighbor islands.

Payment Transformation HMSA's first-year evaluation found fewer primary care visits, no significant reduction in total spending, and a 2.8-point adjusted increase in emergency-department use. [11] HMSA's prior reform did not deliver its full theory of value.

Savings claim The applicants describe more than $2 billion in ten-year savings, but no public model identifies the baseline, integration costs, timing, or distribution of gains. [4] The headline cannot support a net-benefit finding.

Reform without affiliation HMSA removed prior authorization for more than 30 advanced-imaging services effective April 1, 2026. [3] Administrative relief does not inherently require common ownership.

Measurement gap In February 2026, SHPDA said the APCD lacked commercial data other than EUTF and had not ingested Medicare Advantage data. A March roster recorded receipt of HMSA's Q4 2025 data without reporting validation or ingestion. [24,25] The State cannot yet test several central claims with a complete public dataset.

Published accounts HMSA reported claims equal to 94.4% of premiums, claims-adjustment expense of 2.8%, general administration of 4.6%, net investment income of $80.1 million, and a $3.1 million net loss. [19] Premium-dollar claims require a full statutory and consolidated reconciliation.

HMSA and HPH describe a locally governed nonprofit parent, an open system, and continued patient choice. Common control would nevertheless give one enterprise financial interests on both sides of insurance purchasing and healthcare delivery. Its treatment of unaffiliated providers, referrals, capital allocation, benefit design, and related-party transactions therefore belongs at the center of the review. [1,2]

Most of the strongest evidence concerns hospital ownership of physician practices rather than the precise payer-provider structure proposed here, so it cannot yield a numerical forecast for Hawaiʻi. It can still establish the direction of the evidence: higher costs predominate, while quality gains are inconsistent. Favorable findings from selected integrated Medicare Advantage organizations do not show that forming One Health would lower commercial premiums or produce benefits unavailable through contracts, payment reform, shared infrastructure, or regulation. [5-8]

The applicants must identify the public benefits that depend on common control, show how their design avoids the mechanisms associated with higher costs, and compare the proposal with feasible reform while the organizations remain separate. The comparison needs the same populations, cost assumptions, implementation periods, and performance measures. A theory that common ownership makes cooperation easier does not satisfy that burden.

A serious review requires pre-affiliation measurement, independent validation of savings, related-party accounting, and protections for unaffiliated providers. None can substitute for a demonstrated net public benefit, and monitoring cannot repair every structural consequence after the market has changed. Primary care investment and administrative reform need to proceed independently of One Health.

How to read this report. This report distinguishes documented facts, applicant representations, evidence-based inference, and unresolved questions. Where the public record cannot answer a material question, the report identifies the information needed to answer it. Questions of legal compliance belong to the responsible authority and are not adjudicated here.

2. Turn the promises into a testable public record

One Health's public case includes affordability, coordination, prevention, support for physicians, and an open delivery system. Its announcement and subsequent explanations also describe local reinvestment, administrative simplification, workforce support, and benefits extending beyond the affiliated organizations. These are applicant representations, not established outcomes. [1-4]

Table 2 translates those representations into proposed tests. When a benefit can be pursued without common ownership, the measure is the additional benefit attributable to the affiliation after its costs and risks are included. HMSA and HPH need to evaluate feasible alternatives on the same assumptions and evidence standards, while the State obtains a dated, signed commitment schedule instead of treating campaign language as enforceable.

Table 2. Public promises, proposed measures, and the ownership question

Promise or representation How Hawaiʻi should measure it Does the objective require common ownership?

Savings of more than $2 billion over ten years [4] Audited annual net savings against a specified alternative; implementation costs; distribution of gains. Not established. Separate ordinary improvements from gains that depend on integration.

Premium affordability [1] Risk- and benefit-adjusted premium growth, employer contributions, member cost sharing, and total spending. No general necessity. Payment, administration, and rate decisions can change without affiliation.

Better coordination, quality, and less duplication [1,2] Completed handoffs; duplicate testing; outcomes; avoidable acute care; patient-reported access. Possibly facilitated, but contracts and interoperable services are alternatives to evaluate.

Stronger primary care and sustainable payment [2,3] Dollars reaching practices; payment per service; net payment after administrative fees; appointments and continuity. No general necessity. Payers can change payment and the State can set investment requirements.

Reduced prior authorization and administrative burden [2,3] Requests, denials, decision times, appeals, staff time, and comparable treatment of independent practices. No. Pre-affiliation changes already demonstrate that some reform is possible.

Interoperability and better data sharing [2,3] Usable records available across organizations; connection costs; uptime; documented consent and privacy controls. No general necessity. Shared infrastructure can be governed independently of ownership.

Patient choice, physician autonomy, and an open system [1,3] Network changes; referral destinations; benefit tiers; referral incentives; barriers to unaffiliated care. These are protections against potential restrictions, not efficiencies requiring integration.

Recruitment and workforce support [2] Net additional clinical capacity by island and specialty; retention; panel availability; independent-practice participation. No general necessity. Funding and shared services can support unaffiliated practices.

Prevention and social needs [2] Additional spending; eligibility; service delivery; sustained health and access outcomes. No general necessity. Direct contracting and public programs are alternatives.

Local reinvestment and nonprofit governance [1,2] Recipient entities; expenditure purposes; related-party payments; conflicts of interest; independently audited results. Local governance is a structural commitment, not proof of lower cost or equitable allocation.

No layoffs anticipated; savings through attrition ("We do not envision any reduction in force") [29] Hawaiʻi employment, attrition, outsourcing, practice entry and exit, and competitor network access. No. These require explicit obligations and definitions regardless of structure.

Every commitment needs a population, deadline, responsible entity, reporting frequency, and remedy. For example, retaining a physician in a directory is not the same as offering an available appointment, and preserving nominal network participation does not resolve restrictive benefit tiers or financial referral incentives. Those distinctions belong in the commitment itself, before disagreements arise about whether it was fulfilled.

3. The evidence weighs against the claimed efficiency gains

Harris and colleagues reviewed 43 hospital-physician integration studies. Of the 26 examining costs, 19 (73%) associated integration with higher costs, two found lower costs, and five found no effect or ambiguous results. Eighteen cost studies were assessed as medium or high quality, and methodological strength did not change the authors' overall conclusion. Quality findings were inconsistent. The result is a predominantly unfavorable cost record rather than a neutral one. [5]

GAO's 2025 review found that hospital-physician consolidation generally increased commercial prices and traditional Medicare spending, with quality unchanged or worse. One study reviewed by GAO found a 17% increase in office-visit prices after consolidation. Commercial total-spending results were mixed, and GAO emphasized research designs intended to support causal inference. The distinction between prices and total spending matters, but neither the GAO findings nor the Harris review supports a presumption that ownership improves value. [6]

A second systematic review, by Satiani and colleagues, included 37 studies of horizontal hospital consolidation, hospital-physician vertical integration, or both. It reported price increases in 13 of 14 price studies (93%), higher or unchanged costs and spending in 13 of 16 studies (81%), and worse or unchanged quality in 20 of 26 studies (77%). These combined percentages must not be represented as estimates for vertical integration alone or for insurer-provider affiliation. They nevertheless reinforce the broader finding that consolidation has not reliably delivered its promised value. [30]

These reviews overlap in the research they examine, so their study counts cannot be added into a larger independent sample. Nor is counting statistically significant results a substitute for weighing study design, effect size, population, and outcome relevance. Much of this literature is observational; those limitations apply to unfavorable and favorable results alike. An outcome-specific assessment can recognize those limitations while identifying a predominantly adverse cost record and inconsistent quality gains. [5,6,30]

Referral behavior provides a more specific warning. Baker, Bundorf, and Kessler found that hospital ownership of physician practices increased the likelihood that patients used the owning hospital, including high-cost, low-quality hospitals. Hawaiʻi can test the promise of patient choice by measuring actual referral destinations, available alternatives, comparative prices, and clinical circumstances. [9]

Site of care is another mechanism. GAO describes evidence that consolidation can shift services into more expensive hospital-based settings, increasing spending without a consistent quality gain. Hawaiʻi's evaluation needs to follow the same service across physician offices, ambulatory facilities, and hospital outpatient departments, including professional payments, facility charges, and patient cost sharing. Encounter counts alone would miss this source of cost growth. [6]

Evidence directly evaluating payer-provider ownership is smaller than the hospital-physician literature. GAO did not identify studies that sufficiently examined insurer acquisitions of physician practices on spending, prices, quality, or access. That gap prevents transaction-specific prediction, but it supplies no affirmative evidence that the affiliation will deliver the claimed benefits. The proposed incentives therefore require direct examination. [6]

Research by Cuesta, Noton, and Vatter illustrates insurer-hospital network incentives in Chile rather than supplying a numerical forecast for Hawaiʻi. Their structural analysis describes integrated insurers favoring