Mergers in New York State serve to drive up prices but not quality

Hospital mergers in New York State since the passage of the Affordable Care Act (ACA) have resulted in increases in prices but not a commensurate increase in quality. That's the main finding of a study by researchers at the Manhattan Institute, a conservative think tank that touts free markets and individual responsibility.

There were about 50 to 60 hospital mergers a year in New York State in the years prior to the implementation of the ACA, according to the report. That has climbed to 100 or more mergers in recent years. In markets where hospitals are particularly concentrated, prices can rise 20 percent or more

"We find that proponents of greater hospital size tend to ignore the fact that many of the documented benefits derived from hospital mergers are tied to managerial quality, not to size. And we argue that antitrust litigation--because it is infrequently used and does not address existing factors that limit competition in hospital markets--should be only one of several tools deployed by regulators."

Healthcare market experts conclude that there are two kinds of mergers: A "good" merger that enhances healthcare delivery, and a "bad" merger that decreases competition. However, the consensus appears to be that the increasing number of mergers, even those that occur in fragmented markets, causes prices to rise and may set up a dire fiscal situation in the future.

Instead, the report said regulators should push hospitals toward greater price transparency and "establish a New York State Health Cost Commission, modeled after the Massachusetts Health Policy Commission, that is mandated to produce annual reports on healthcare cost and consolidation trends in New York State."

To learn more:
- read the Manhattan Institute report (.pdf)