How healthcare merger-mania hurts competition, care access

The current wave of consolidation in the healthcare industry is bad for care access, competition and patient choice, argues an opinion piece published in the Journal of the American Medical Association.

Last year, mergers and acquisitions (M&A) activity reached record highs in the sector, with the value of such transactions hitting $438 billion, or about 14 percent of all business M&A, FierceHealthFinance previously reported.

Recent months have seen a similar wave of mergers within the health insurer sector, and providers have expressed concerns about how it will affect competition, FierceHealthcare previously reported.

In addition, about one in five U.S. hospitals will likely seek a merger by 2020, according to the JAMA piece. As a handful of large hospital chains swallow up independent operators, they run the risk of creating "too big to fail" entities, write Marty Makary, M.D., a professor of surgery at Johns Hopkins University School of Medicine, and colleagues.

Of the 306 geographic healthcare markets nationwide, none are considered "highly competitive," and about half are "highly concentrated," which means a single entity dominates the healthcare market, according to Makary and his team. Hospital transactions that may hurt competition have come under considerable scrutiny in recent years, such as last year's ruling that St. Luke's Health System's acquisition of Idaho's largest independent physician practice violated antitrust laws.

"Limited integration," the authors write, can be good for both hospitals and patients, particularly when larger operators and smaller regional providers have the opportunity to exchange knowledge and ideas. But when M&A becomes so extensive that it stifles competition, innovation goes down while over-treatment goes up, due to financial incentives that pay physicians to refer patients for care within the system. Moreover, many hospital leaders overlook management duplication, resulting in an organization where multiple people do the same job.

High levels of consolidation also put patients' care access at risk, the authors write. If a system becomes large enough to be a patient population's only option, its failure could leave them without healthcare options in the area unless the government intervenes.

To learn more:
- read the opinion piece