Healthcare consolidation in California is coming under scrutiny, as the state attorney general looks into whether hospital-physician partnerships are driving up prices in a way that violates antitrust laws, The Wall Street Journal reported.
Some of the state's large hospital operators, such as Dignity Health, Scripps Health and Sharp HealthCare, have received subpoenas about their reimbursement rates, in addition to major California health insurers.
The Attorney General's investigation is bolstered by a July report from the Robert Wood Johnson Foundation that found consolidation among hospitals can lead to price increases, often exceeding 20 percent.
However, the American Hospital Association maintains that healthcare mergers and acquisitions don't normally boost payment rates, the WSJ noted.
Similarly, the California Hospital Association (CHA) defended consolidation efforts between hospitals and other providers, noting that it's necessary for reaching health reform's goal of coordinated care, as well as for complying with burdensome federal and state laws.
"Many individual hospitals could not meet the state's expensive earthquake construction requirements without the financial strength of a larger system. Similarly, hospital systems can provide each institution within the system with administrative and clinical services and support which an individual hospital cannot provide on its own," CHA President C. Duane Dauner said Friday in a statement.
Although California hasn't seen a lot of big hospital deals of late, hospital-physician integration has been on the rise, the WSJ noted.
Regardless of anti-trust scrutiny and price concerns, healthcare consolidation may be here to stay, as smaller hospitals struggling with declining profits and Medicaid cuts continue to merge and affiliate with larger institutions, FierceHealthcare recently reported.