End the war on small medicine

Healthcare giants are on a shopping spree. In just the first three months of this year, large hospitals and health systems bought up smaller entities in 15 different deals valued at $12.4 billion.

It’s the latest evidence of a long-running trend of consolidation among healthcare providers. That may be good for the health systems’ finances. But it’s raising costs and yielding worse care for patients.

Independent doctors are vanishing. Hospitals and corporations acquired more than 36,000 physician practices between 2019 and 2023. Last year, roughly three in four doctors were employed by a hospital or larger corporate entity like a health insurer — a 19% increase from 2019.

Hospitals are consolidating, too. There were more than 1,880 hospital mergers announced between 1998 and 2023. Ninety percent of the country’s hospital markets were considered highly concentrated in 2017. The ten largest health systems control about 25% of the market.

One consequence of all these mergers is less patient choice. When one health system takes over an entire region, patients essentially have to to receive care in its affiliated hospitals and clinics.

Proponents of all this consolidation claim that it allows hospitals to keep their doors open — and that bigger health systems can leverage economies of scale to offer better access to high-quality care at lower cost.

But a closer look at the data reveals that isn’t the case.

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Janet Trautwein Health Care Commentary TRAUTWEIN

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more than 6% when one merges with or acquires another in the same geographic region. Some experts put the average price increase at nearly 20%.

Findings like these are intuitive. Why would hospitals and health systems share their cost savings with patients and insurers? When they buy up their competition, they don’t have to worry about losing customers. There’s nowhere else for them to go. That gives them leverage to demand higher prices from payers.

And that leads to higher premiums. Between 2014 and 2017, enrollees in the Affordable Care Act’s exchanges who lived in areas with higher levels of hospital concentration had annual premiums 5% higher than those in less concentrated areas.

Those increased costs don’t buy better care. Research in the New England Journal of Medicine concluded that “hospital acquisition by another hospital or hospital system was associated with modestly worse patient experiences and no significant changes in readmission or mortality rates.”

There’s some evidence that consolidation actually yields worse care. Medicare patients living in highly concentrated hospital markets are nearly 5% more likely to die within one year of having a heart attack than those living in less concentrated markets.

And despite conglomerates’ claims, mergers don’t typically lead to an expansion of services or save hospitals from closing. In many cases, health systems concentrate services in a regional “hub” hospital — and transform smaller hospitals into little more than outpatient clinics.

Despite all these downsides, federal antitrust regulators haven’t done much to stop healthcare merger mania. The FTC has attempted to block just 1% of hospital mergers over the past few decades.

It’s long past time for that to change. The FTC’s hospital merger guidelines haven’t been updated since 2010. And according to reporting from ProPublica, they only detail how to evaluate and challenge consolidation between hospitals in the same market.

There’s nothing on how to deal with hospitals buying up competitors in other markets.

Consolidation among healthcare providers is far from what the doctor ordered. Lawmakers and regulators need to put a stop to it.

Janet Trautwein is CEO of the National Association of Bene-fits and Insurance Professionals ( nabip. org).