House Subcommittee Takes Dim View of Healthcare Consolidation

The House Judiciary Committee’s antitrust subcommittee recently discussed hospital and health system consolidation and its effect on the general population. The vast majority of the discussion was critical of mergers among hospitals and other healthcare companies. Although the public is often told that consolidation will provide improved efficiency and higher-quality care, the reality is that efficiency and quality care rarely result.

Since both Democrats and Republicans have expressed interest in addressing payer and provider consolidation and anticompetitive concerns about the pharmacy, this discussion could signal how lawmakers will approach legislation designed to control either of these factors.

One of the greatest critics was Martin Gaynor, PhD, an economics and health policy professor at Carnegie Mellon University and a founder of the Health Care Cost Institute. He told the subcommittee that there have been nearly 1,600 hospital mergers in the past 20 years, and as a result, most regions are dominated by one large health system each.

“This massive consolidation in healthcare has not delivered for Americans. It has not given us better care or enhanced efficiency,” Gaynor told the subcommittee. “On the contrary, extensive research evidence shows us that consolidation between close competitors results in higher prices, and patient quality of care suffers for lack of competition.”

Gaynor provided support for his claims in the form of written testimony, in which he shared research on the subject that he completed with Farzad Mostashari of Aledade and Paul B. Ginsburg of The Brookings Institution.

In his oral testimony, Gaynor recommended several possible policy changes that could address consolidation and anti-competitive issues in the pharmaceutical industry. One of those is an end to policies that make it harder for new competitors to enter a market. In addition, he suggested that expanded authority for the Federal Trade Commission to review potentially anticompetitive conduct by nonprofit industries. (Many U.S. hospitals are nonprofit organizations.) He said lawmakers should think about imposing requirements for even small transactions to be reported to the FTC, in order to enhance enforcement agencies’ tracking capabilities.

Rep. Doug Collins (R-Georgia), the subcommittee’s ranking member, said hospital consolidation has primarily hurt rural areas in his state, leaving them without nearby quality care and forcing patients to travel great distances to get medical care.

New York Democrat Jerry Nadler, the subcommittee’s chairman, said that these mergers have contributed to the industry’s problems, echoing Gaynor’s statement that hospital mergers can lead to higher prices and lower quality of care.

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