Moody's likes small, focused deals that help insurers add capabilities.

Health insurers used mergers and consolidation to get the clout to bargain hard with big health care providers. Now Stephen Zaharuk, an analyst at Moody’s Investors Service, says credit analysts think providers might use deals of their own to bargain harder with insurers.

Zaharuk writes in a new commentary that providers might use mergers and acquisitions to get enough share to threaten insurers’ ability to operate in some markets.

See also: Hospital deals drive up prices

If a big provider started or acquired its own captive insurer, it might be able to brush traditional insurers aside by offering customers of the captive insurer lower prices for care, or giving the patients with coverage from the captive insurer easier access to care, Zaharuk writes.

Zaharuk also writes about the credit implications of insurers’ own deals. Moody’s generally likes small, focused deals that insurers make to acquire specific capabilities, Zaharuk says.

Moody’s is more skeptical of insurers’ efforts to acquire physician practices. ”The primary risk is the need to separate the insurance operation from the medical practice to avoid any perceived conflict of interest and medical malpractice liability,” Zaharuk writes.

In some cases, he says, insurers have made physician practice deals that reduce those concerns by clearly distinguishing between the insurers’ insurance operations and clinical operations. Moody’s views on health care trends can have a concrete effect on insurers’ operations, because lenders use ratings from Moody’s and other firms when deciding whether to issue credit to companies and how much to charge for credit.