When hos­pi­tals merge, patients often pay more

The Charlotte Observer (Sunday) - - News - BY REED ABELSON New York Times

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 hospi- tal 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.

Pres­i­dent Don­ald 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 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 offi- cials. “A lot of this is too lit­tle and too late,” he said.


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.”


Thou­sands of Con­necti­cut res­i­dents were stranded with­out a lo­cal hos­pi­tal last year when an­other big hos­pi­tal group, Hart­ford Health­Care, bat­tled the state’s big­gest health in­surer over how much it would charge for pa­tient care.

Its six hos­pi­tals are clus­tered around the state cap­i­tal and are the only re­sort for res­i­dents in broad swaths of the eastern part of the state. This month, it an­nounced plans to add a sev­enth hos­pi­tal to its net­work.

“Th­ese sys­tems are em­pire-build­ing, there’s no ques­tion,” said Jill Zorn, a se­nior pol­icy of­fi­cer for the Universal Health Care Foun­da­tion of Con­necti­cut, which seeks to im­prove ac­cess for res­i­dents. “But to whose ben­e­fit?”

Nu­mer­ous stud­ies by econ­o­mists and oth­ers have un­der­scored how hos­pi­tal con­sol­i­da­tion is driv­ing up the cost of med­i­cal care. “Within the aca­demic com­mu­nity, there is near una­nim­ity,” said Zack Cooper, a health econ­o­mist at Yale Univer­sity who is among a group of re­searchers that has looked at the way dom­i­nant hos­pi­tals af­fect prices.

The emer­gence of a one-hos­pi­tal town is in­evitable in many places. In the Park­ers­burg, West Vir­ginia, area, St. Joseph’s merged with neigh­bor­ing Cam­den-Clark Me­mo­rial in 2011, and then they were con­sumed by what is now the state’s largest health sys­tem.

“We’ve got it down to a sin­gle cam­pus,” said Al­bert L. Wright Jr., chief ex­ec­u­tive of West Vir­ginia Univer­sity Health Sys­tem. “Park­ers­burg is not big enough to sup­port two hos­pi­tals.”

Res­i­dents can get most care lo­cally, but they go to Mor­gan­town, where the aca­demic med­i­cal cen­ter is sit­u­ated, for com­plex con­di­tions. “We’ve el­e­vated the level of care,” Wright said.

But pri­vate in­sur­ers are pay­ing more. In the Park­ers­burg-Vi­enna area, the over­all price of a hos­pi­tal stay increased 54 per­cent from 2012 to 2014, af­ter the merg­ers. That is com­pared with 10 per­cent else­where in the state, ac­cord­ing to the Petris Cen­ter.

Large sys­tems “get paid bet­ter by some of the in­sur­ers,” Wright said.


In a 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.

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