The Healthy Skeptic: The pernicious effects of health care consolidation

Meanwhile, these extremely large organizations now spend tens of millions of dollars on lobbying and political contributions to prevent any examination of their abuses.

health care
For an extended period of time there has been ongoing massive consolidation of health care providers, health plans and everything else in health care. (Adobe Stock)

For an extended period of time there has been ongoing massive consolidation of health care providers, health plans and everything else in health care. Urban markets have consolidated to just two or three large hospital systems, which have also purchased physician practices and other provider types. Independent physician groups have also been acquired by venture capital and private equity firms, creating large regional and national practices. Most Americans have health plan coverage from one of a handful of large health plan companies — UnitedHealth Group, CVS/Aetna, Cigna, Anthem, Kaiser. Most health plan markets are oligopolies with little competition. We also have an increasing mixing of the provider and health plan roles — UnitedHealth is the largest employer of physicians and almost every large health plan company also owns or controls many doctors and other health care providers. Many regional health plans also have provider arms.

Multiple pieces of research have laid out the pernicious impacts of all this consolidation and concentration. One such piece comes from the Kaiser Family Foundation, focusing on consolidation in provider markets. It provides an excellent background and notes that in the last 25 years there have been over 2000 hospital mergers or acquisitions and that the percent of physicians working for hospitals has risen from 29% in 2012 to 41% in 2022. The brief sets out the data demonstrating that this consolidation is associated with higher prices and uncertain and unlikely quality improvements. (KFF Brief)

Antitrust enforcement agencies have completely failed to meaningful challenge or stop many hospital mergers which were likely to have deleterious impacts on competition and consumers. (AER Study) Even mergers of hospitals across regions, not in the same city, for example, but between two cities are harmful to competition and consumers, with price increases and no positive effect on certain quality measures. (HSR Study) The Federal Trade Commission and Department of Justice have recently expressed more concern about the level of concentration among providers and health plans, with DOJ forming a new “task force” to examine these markets. Too little, too late.  (DOJ announcement)

Most distressing of all about the massive wave of consolidation which has engulfed the country for decades is that none of the supposed benefits have emerged. There has been no cost control, no improvement in access, and patients’ health status and outcomes are no better. Meanwhile, these extremely large organizations now spend tens of millions of dollars on lobbying and political contributions to prevent any examination of their abuses. And they do extensive advertising to try to persuade consumers that they aren’t being ripped off. Legislatures and regulatory agencies should demonstrate some courage, do their jobs and force a restructuring of the industry to create a more competitive environment.

Kevin Roche runs The Healthy Skeptic, a website about the health care system, and has many years of experience working in the health care industry. If you have health care-related questions, you can contact Kevin at xuebpur@urnygul-fxrcgvp.pbz and he may answer the question in a column. Read more from Kevin Roche at his website: healthy-skeptic.com

 

Kevin Roche
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Kevin Roche runs The Healthy Skeptic, a website about the health care system, and has many years of experience working in the health care industry.