There have been 1,164 mergers among health systems between 2000 and 2020, and a recent study found those transactions increased prices by 5.2%.
The study, a collaboration between researchers at New Haven, Conn.-based Yale University, Cambridge, Mass.-based Harvard University, the University of Chicago and the University of Wisconsin-Madison published in American Economic Review: Insights, analyzed data from 1,164 mergers among the nation's 5,000 acute-care hospitals between 2000 and 2020.
The FTC challenged only 13, or 1%, of those mergers. However, the agency could have flagged 238, or 20%, of mergers as likely to reduce competition and increase prices based on the standard screening tools available during that time, researchers wrote.
The researchers found that mergers the FTC could have challenged between 2010 and 2015 eventually led to price increases of 5% or more.
"Since 2000, hospital prices have grown faster than prices in any other sector of the economy," study co-author Zack Cooper, PhD, an associate professor of health policy at the Yale School of Public Health and of economics in Yale's Faculty of Arts and Sciences, said in an April 24 university news release. "The average price of an inpatient admission is now nearly $25,000."
Operating costs dropped 4% to 7% on average at acquired hospitals following a deal and quality remained the same or declined after mergers, The Wall Street Journal reported April 24.
Here are three more study findings:
- The study found 90% of hospital markets are highly concentrated.
- An estimated 53 hospital mergers that occurred between 2019 and 2015 raised health spending on the privately insured by $204 million in the following year alone.
- Mergers in rural regions with lower incomes and higher poverty rates generated larger average price increases, most often in outpatient services. This could be because those regions have fewer freestanding clinics that offer surgical and imaging services that compete with hospitals.
The American Hospital Association's general counsel, Chad Golder, told the Journal that the study was incomplete because it did not include prices for some large insurers. However, the study did include claims from CVS Health's Aetna, UnitedHealth's UnitedHealthcare and Humana.