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Hospitals Get Bigger, America Goes Broke

When hospitals purchase doctors’ practices, we all lose. New research by Stanford University scientists confirms that consolidation raises the price of care by giving hospitals more market power over insurance companies. Kaiser Health News has more:

The study, published Monday in the journal Health Affairs, was based on an analysis of 2.1 million hospital claims from workers of self-insured employers between 2001 and 2007.  The analysis by Stanford University researchers found prices were most likely to increase when hospitals bought physician practices, as opposed to hospitals forming looser contractual relationships with physicians […]

The Affordable Care Act has accelerated the trend by encouraging the establishment of Medicare accountable care organizations that pay large groups of providers based on how well they control costs and improve quality.

The Kaiser story speculates that this news could spur the Federal Trade Commission to more closely watch hospital mergers, and perhaps more vigorously apply anti-trust legislation to them.

We hope so, because it’s past time. The Affordable Care Act is focused on access issues rather than cost issues, so very real cost drivers like hospital consolidation have been largely absent from our national conversation about health care. Expanding access becomes easier when care is cheaper; making health care more affordable will require rethinking the settings in which, and the methods by which, we deliver care. Breaking up big hospital systems will likely be an important part of reform.

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  • SisyphusRolls

    We could make a big dent in the cost problem by changing the way Medicare sets prices, which is to effectively outsource the job to a committee of the AMA. In any other industry, where that kind of advisory role was not enshrined in law, the FTC would have long ago busted the industry for price-fixing.

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