When hospitals merge, patients often pay more
The nation’s hospitals have been merging at a rapid pace for a decade, forming powerful organizations that influence nearly every health care decision consumers make.
The hospitals have argued that consolidation benefits consumers with lower prices from coordinated services and other savings.
But an analysis conducted for The New York Times shows the opposite to be true in many cases. The mergers have essentially banished competition and raised prices for hospital admissions in most cases, according to an examination of 25 metropolitan areas with the highest rate of consolidation from 2010 through 2013, a peak period for mergers.
The analysis showed that the price of an average hospital stay soared, with prices in most areas going up between 11 percent and 54 percent in the years afterward, according to researchers from the Nicholas C. Petris Center at the University of California, Berkeley.
The new research confirms growing skepticism among consumer health groups and lawmakers about the enormous clout of the hospital groups. While most political attention has been focused on increased drug prices and the Affordable Care Act, state and federal officials are beginning to look more closely at how hospital mergers are affecting escalating health care costs.
During the Obama years, the mergers received nearly universal approval from antitrust agencies, with the Federal Trade Commission moving to block only a small fraction of deals. State officials generally looked the other way.
Trump issued an executive order last year calling for more competition, saying his administration would focus on “limiting excessive consolidation throughout the health care system.”
In September, Congress asked the Medicare advisory board to study the trend.
But not only have big consolidations continued, the behemoths have further cemented their reach in some regions of the country by gobbling up major doctors’ and surgeons’ practices.
“You have to watch for these systems throwing their weight around,” said Xavier Becerra, the California attorney general whose office has sued Sutter Health, a sprawling system in the northern
MERGERS HAVE ESSENTIALLY BANISHED COMPETITION IN MOST CASES.
part of the state. “We are looking for cases where consolidation does nothing for efficiency and leads to distortions of the market.”
Ted Doolittle, who heads Connecticut’s Office of the Healthcare Advocate, has fielded angry complaints from residents, but he sees few options available to officials.
“A lot of this is too little and too late,” he said.
PATHS FOR GROWTH
The latest giant hospital consolidations continue to stir concerns. Dignity Health and Catholic Health Initiatives, two large chains, are expected to become one of the nation’s largest groups – with 139 hospitals in 28 states – by the end of the year. And two of Texas’ biggest systems, Baylor Scott & White Health and Memorial Hermann
Health System, recently announced plans to combine.
In Connecticut, the New Haven area has witnessed the most significant decline in competition.
Yale New Haven
Health, one of the largest hospital groups in the state, took over the only competing hospital in the city and has also aggressively expanded along the state’s coast. The group recently added another hospital to its collection, merging Milford with its Bridgeport location.
Although the price of a hospital admission in the New Haven-Milford area was already three times as much as in other parts of Connecticut, prices surged by 25 percent from 2012 to 2014, compared with 7 percent elsewhere in the state, according to the Petris Center.
In the national analysis, a third of the metropolitan areas experienced increases in the cost of hospital stays of at least 25 percent from 2012 to
2014, to at least $15,000 from roughly $12,000.
Prices rise even more steeply when these large hospital systems buy doctors’ groups, according to Richard Scheffler, director of the Petris Center.
“It’s much more powerful when they already have a very large market share,” said Scheffler, who recently published a study on the issue in Health Affairs. “The impact is just enormous.”
In an analysis, a third of the metro areas experienced increases in hospital stay costs of at least 25 percent from 2012 to 2014, to at least $15,000 from roughly $12,000.