Year: 2021
Type: article
Abstract: Health care consolidation reduces competition and increases prices, with limited benefits to quality of care. 1 From 1998 to 2017, nearly 1600 hospital mergers occurred, many resulting in price increases of more than 20%. 2 These price increases are partly because health care systems with dominant market share can negotiate higher prices and anticompetitive contracts.Although the Department of Justice (DOJ) successfully litigated against antitiering and antisteering practices by Atrium Health in 2018, it has only filed 2 antitrust cases against hospital systems since.Increasing practice consolidation may be another legacy of the COVID-19 pandemic.Smaller practices and safety-net hospitals typically lack financial reserves and were less able to access emergency relief funding.As a result, these practices could downsize, be acquired by larger conglomerates to offset financial burdens, or experience physician flight or retirement.3 These trends merely exacerbate policies that have furthered practice consolidation.Complex administrative and compliance requirements add costs for independent practices.Additionally, hospitals receive higher reimbursement for identical services through what are known as facility fees.These fees, originally intended to cover hospital overhead costs, are often applied to services outside the hospital setting, incentivizing hospitals to purchase practices.1 President Biden's 2020 campaign policy platform explicitly called for the need to "tackle market concentration across our health care system," including through aggressive antitrust action, and the Federal Trade Commission (FTC) has already announced plans to study the effect of consolidation on health care costs.Kocher and colleagues 4 suggest that this goal may require revising the definitions used to measure hospital market concentration and clearly setting the minimum threshold of market share needed to be considered a market-dominant hospital.The nominee for Secretary of the Department for Health and Human Services, Xavier Becerra, could champion such reforms, having brought successful antitrust litigation against Sutter Health as California attorney general.Dafny 5 as well as Cooper and Gaynor 2 have recommended increasing the federal antitrust enforcement budget 2 and revising horizontal merger guidelines.5 While the approach by the FTC and DOJ to prevent hospital mergers has received considerable attention, 2,4,5 the Biden administration has additional specific opportunities to leverage legislative, regulatory, and administrative action to promote competition. Supporting Bipartisan LegislationGiven slight Senate margins, health legislation will need to attract bipartisan support or be narrowly scoped under budget reconciliation.There have been several recent bipartisan proposals to improve competition, including the Lower Health Care Costs Act of 2019, which was cosponsored by Senators Alexander (R-TN), Ernst (R-IA), and Murray (D-WA).The bill aimed to protect patients from surprise medical bills but also sought to improve transparency of price and quality information, promote data interoperability, and limit antitiering and antisteering clauses in contracts.The Hospital Competition Act of 2019, cosponsored by Representatives Banks (R-IN) and Westerman (R-AR), planned to require hospitals without sufficient competitors to accept Medicare reimbursement rates regardless of their enrollees' Medicare status and mandate hospitals to publish prices for certain highly used services.If the Biden administration chooses to elevate health care competition as a priority, it may garner rare bipartisan support.
Source: JAMA Health Forum
Authors: Joseph T. Kannarkat, Farzad Mostashari
Institution: University of Maryland, Baltimore
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $5,000
OpenAlex ID: W3155772336