An excellent article by Washington Monthly’s Eric Cortellessa described a Senate antitrust hearing focused on hospital and health care system consolidation.
Believe it or not, the problems created by hospital consolidation have brought bipartisanship to the Senate, with arch-conservative Josh Hawley and liberal icon Richard Blumenthal agreeing that consolidation is bad.
Hawley opined”private equity and their [sic] intervention here is actually helping drive consolidation in a way that is unhealthy in this industry and can be particularly harmful for rural communities…”
Blumenthal: “incentives and self-interest of the private equity funds drive the finances rather than respect and care for the patients who are there or the professional staff who ensure quality care.”
It’s not just private equity – most consolidation is driven by massive health care systems looking to dominate markets and thereby control pricing. And that’s exactly what happens. According to chair Amy Klobuchar, “hospital prices are 12 percent higher in monopoly markets compared to those with four or more competing hospitals.”
That’s one reason profits are zooming for hospital companies Tenet, UHS, HCA and CHS.
What does this mean for you?
Nothing good.
No doubt that consolidation is driving up prices, as monopolies tend to act monopolistically. However using anti-trust to keep fragmented systems fragments is not the answer, it leads to lack of coordination of care, duplication, misused resources, as institutions fight for dominance. Better to allow consolidated systems, and regulate their prices, such as capping rates allowed to a Medicare based rate and implement site neutrality for outpatient rates. Let institutions strive for profitability from efficiency, not from exploitation.
Thanks for the note Robert.
Unfortunately price regulation across payer types is unlikely to become reality any time soon in most states. Thus anti-trust is the best tool available to address the current problem.
be well – Joe