Dive Brief:
- Research by major organization Catalyst for Payment Reform has concluded that far from saving money, mergers within the hospital industry drove up prices 3% in recent years.
- According to the group's executive director, Suzanne Delbanco, that 3% may not sound like much, but when you consider that it is a percentage of the $900 billion the US spends on hospital care each year, it's a very meaningful increase.
- What's more, Delbanco notes, some hospitals systems raise the prices far more after merging. For example, when the Bay Area's Summit Health and Alta Bates Medical Center merged in the late 1990s, prices rose at two hospitals by as much as 44%.
Dive Insight:
Not only does Delbanco deny that mergers can lower hospital prices, she also rejects the argument that hospitals need to consolidate to achieve economies of scale and cut overhead. "When mergers happen in already concentrated markets, price increases can exceed 20%," she told the Wall Street Journal. In her view, providers can deliver well-coordinated, high-quality care without undertaking a merger.
What makes her comments even more newsworthy is that the FTC seems to share her views. Recently, the agency—which agrees that doctors can coordinate care without a formal merger—has begun to use the Clayton Antitrust Act of 1914 to successfully challenge some hospital mergers and acquisitions. These include three litigated hospital mergers in the last two years alone, including deals in Albany, GA, Toledo,OH and Rockford, IL. Increasingly, it's beginning to look like hospital or health system mergers will not turn out to be the solution the industry uses to accomplish quality and cost goals.
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