SPOTLIGHT: Hospital Consolidation Leads to Higher Healthcare Costs

Did you know ninety percent of America’s hospital markets were considered “highly concentrated” in 2017? Six years later corporate hospital system mergers continue to limit competition and drive patients prices through the roof. 

The good news? Congress is finally taking notice. So much so, both Republicans and Democrats have their sights set on tackling hospital consolidation’s role in driving America’s healthcare spending crisis. Bipartisan consensus is a rarity these days, but the data surrounding consolidation is clear:

  1. Hospital prices go up 6 to 20 percent when one merges with or acquires another.
  2. This leads to higher premiums and lower quality care.
  3. Three out of four doctors now are employed by large hospital systems or health plans.

RealClear Health’s recent article on the issue sums it up nicely, “Out-of-control hospital prices are part of a vicious cycle where hospital consolidation drives up prices and subverts the competition needed to keep costs in check. In turn, higher costs undermine the adequacy of Medicare payments to hospitals, which leads more hospitals to consolidate.

Americans deserve a competitive marketplace that affords patients the ability to ‘shop around’ for the best care at the best price for them. Fortunately, there is currently legislation under consideration in the House and Senate that would address a major cost driver associated with hospital consolidation: the Senate’s SITE Act and the CARES Act in the House.

These bills would increase price transparency, address arbitrary hospital fees, and expand site-neutral payment reforms – preventing the situation Brian Connell of the Leukemia & Lymphoma Society described in his testimony to the House Energy and Commerce Committee below:

“Despite the patient going to the same office, being treated by the same staff, and receiving the same medication, the shift in underlying reimbursement—from the lower physician fee schedule to the higher hospital outpatient payment system—increases the patient’s out-of-pocket costs without any corresponding improvement to the quality of their care.”