Experts say there's growing evidence 'under the radar' healthcare consolidation hurts consumers

Merger of Marriott and Starwood
Experts agreed the industry should reframe the way it approaches mergers, focusing on clinical integration rather than financial integration.

There are more and more examples of how mergers and acquisitions in healthcare are hurting consumers in California, a group of health economists said at an event hosted by the journal Health Affairs on Monday.

The percentage of primary care physicians in practices owned by hospitals increased in many Golden State counties from about 25% to nearly 40% between 2010 and 2016, according to an article in the latest edition of the journal. During the same time frame, the percentage of specialists in hospital-owned practices rose from 20% to more than 50%.

These vertical mergers are occurring “under the radar,” said Richard Scheffler, Ph.D., of the University of California, Berkeley, lead author of that study. When patients see a doctor, they do not know who that doctor works for. But the effects of these mergers, he continued, are “like a hurricane.”

The University of Southern California’s Glenn Melnick, Ph.D., shed additional light on this trend. California kept costs at bay for years through managed care policies that encouraged competition among providers, he said.

RELATED: Study links physician consolidation with higher healthcare costs in California

But after antitrust authorities allowed hospitals to purchase entities that were not direct, local competitors, prices at the two largest hospital systems in California increased sharply, he explained. Policies that gave hospitals more power when contracting with insurance plans also contributed to these price increases.

Scheffler said he doesn’t think there’s convincing evidence the deals have improved health outcomes or the quality of care—and those that do “need to make their case.”

At this point, “we need to think about how to make these large integrated systems compete with each other,” he said.

There is also an antitrust issue at hand as large, merged practices keep competitors out of the market, he said—and law enforcement needs to address this.

Scheffler agreed with Laurence Baker, another panelist who also co-authored an article on competition in this month’s Health Affairs.

Providers “don’t always have to be financially integrated in order to be clinically integrated and achieve some of the benefits of care improvement,” Baker said.

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