Big mergers face federal scrutiny as smaller deals go unnoticed

Big healthcare mergers, like the proposed deal between Advocate Health Care and NorthShore University HealthSystem in Chicago, face intense federal scrutiny. But regulators often ignore smaller deals involving hospitals and physician groups that over time create entities that dominate local or regional markets, The New York Times reports.

Healthcare consolidation is on the rise, as many organizations view the partnerships as a way to provide better care at lower cost.

Although the Federal Trade Commission (FTC) has successfully blocked big hospital mergers, it often neglects to look at the smaller deals, according to the article. "There's a lot of consolidation going on at a lot of levels," Leemore S. Dafny, a health economist at Northwestern University, told the Times. "I don't think the antitrust laws are set up to stop it."

But the Times reports that these smaller deals eventually lead to higher healthcare costs. The increased market share allows hospitals to charge more, but federal regulators have little information about these transactions.

There were more than 900 healthcare deals involving physician practices, hospitals and nursing homes in 2015, the newspaper reported, with these deals valued at a total of $175 billion.

While it tried to block the big hospital merger in Chicago, the FTC didn't pay attention to mergers that have created the largest independent physician group in Illinois, according to the newspaper. In the last five years, DuPage Medical Group has made more than a dozen deals and doubled its size to 500 doctors.

Michael A. Kasper, the chief executive of DuPage Medical Group, told the publication that the practice now has more leverage with local hospitals. "There's no question we have a higher degree of influence because of our size," he told the Times.

To learn more:
- read the article