Healthcare mergers don't improve quality, experts warn

Hospital mergers and the monopolies they create are causing healthcare costs to rise without an accompanying improvement in quality, three experts argued Friday during a panel hosted by the American Enterprise Institute in Washington, D.C. Incentives to create accountable care organizations (ACOs) could cause even more problems by encouraging additional consolidation, they warned.

More than 1,000 healthcare mergers and acquisitions since 1994 is muffling competition and allowing higher prices, said panelist Martin Gaynor, professor of economics and health policy at Carnegie Mellon University, according to an event summary by the conservative-leaning AEI think tank. In 2011 alone, 980 healthcare mergers and acquisitions worth $227.4 billion took place.

As for ACOs, Gaynor called them a potential "anti-competitive sham" dominated by hospitals, according to Kaiser Health News.

The question of whether ACOs will exacerbate healthcare monopolies is not new. In January, critics raised just that issue when a new ACO in Vermont and New Hampshire brought together hospitals, physician practices and community-based healthcare services covering more than one-third of Vermont's 118,000 Medicare beneficiaries. Competing hospitals in Minnesota also came together to form an ACO.

Such partnerships are reviewed by the Department of Justice and the Federal Trade Commission, which weigh ACO benefits against the impact on market competitiveness.

But despite what the AEI panel deemed a "humongous monopoly problem in health care," most patients remain insensitive to rising costs because they are obscured by health insurance, according to panelist Barak Richman of the Duke University School of Law.

To learn more:
- read the AEI summary (video links available)
- here's the Kaiser Health News article