Provider consolidation is driving up healthcare costs and the country would benefit from "stronger antitrust enforcement, more competition and fairer prices" for hospital and physician services, the left-leaning Center for American Progress said in a new report.
Though hospitals and health systems say consolidation results in better efficiency, lower costs and more coordinated care, the group said that's not always the case. Savings also don't wind up getting passed onto the consumer, the report said.
The organization offered recommendations to reduce market power abuses and protect patients, including more regulation enforcement and imposing site neutral payments.
Healthcare M&A remains red hot — activity surpassed $315 billion in the first half of 2018. Thomson Reuters said that's double the activity from a year ago.
The Center for American Progress made the case in its paper that efforts to bend the cost curve must tackle a lack of competition in healthcare markets.
A small handful of companies control many healthcare markets and mergers and consolidations often aren't in consumers' best interest. In fact, it means fewer patient choice, while usually not lowering prices. Regulators should scrutinize these deals closer, the center said.
"The current state of healthcare provider markets demands stronger enforcement by federal and state antitrust authorities, policies to support more robust competition among providers, and limits on prices in already concentrated markets. Any efforts to control healthcare costs and improve care for patients should consider the growing role of market power," according to the report.
The Center for American Progress gave a few recommendations:
- Strengthen regulatory enforcement for both horizontal and vertical integration.
- Increase competition through more price, quality and utilization transparency, make anti-competitive contract clauses illegal and make provider payments site-neutral.
- Reduce prices in concentrated markets by creating a patient ombudsman, cap provider prices and level prices among payers across providers.
The policy suggestions come on the heels of an American Enterprise Institute panel that criticized the federal government for not targeting anti-competitive behavior in healthcare. AEI, a right-leaning think tank, held the report a day after HHS issued a 119-page report on how to improve competition in healthcare.
Though AEI and the Center for American Progress are on either side of the political spectrum, the report and speakers at the event echoed concerns about mergers and what they’re doing to healthcare prices.
"Antitrust enforcement is the easiest and most effective way to start changing policy tomorrow," Barak Richman, a law professor and healthcare policy researcher at Duke Law School, said at the event.
Horizontal mergers among payers have been somewhat less scrutinized by regulators, but horizontal provider deals remain fairly common. Last month, the California Department of Justice, which has spoken out about merger concerns, gave its conditional approval on a deal between Dignity Health and Catholic Health Initiatives. The new system, which will be known as CommonSpirit Health, would create the largest nonprofit health system based on revenue.
As part of the approval, the health system must preserve access to healthcare services for Dignity Health patients, provide discounts to patients who earn 250% of the federal poverty level and allocate $20 million over six years to treat and support homeless patients.
A Boston-area hospital merger also received condition approval recently. The Massachusetts attorney general said Beth Israel Deaconess Medical Center and Lahey Health could pursue their deal but the combined system will be barred from raising prices past a certain threshold for seven years following closure.