Researchers: Hospital Deals Weaken Competition

“If hospitals offer an improved product, payers may be willing to pay more for it,” the researchers write. “However, the study found little or no effect of systems on inpatient quality. Consequently, any price changes are likely to reflect gains or losses in market power.”

Federal antitrust regulators have had little luck persuading the courts to block hospital mergers, but the number of hospital deals has been falling because many of the best targets already are part of multi-hospital systems, the researchers write.

“We find that acquisition leads to higher prices despite using a broad market definition, rather than a narrow geographic area, as would likely be used in an antitrust case,” the researchers write. “Furthermore, we find that any commitments hospitals may make in exchange for acquisition approval, such as quality or charity care, appear to be difficult to achieve, at best.”

From an overall policy perspective, the researchers conclude, their findings show that the effects of hospital consolidation on the health care market may need to be re-examined.

“Outside of antitrust enforcement, health policymakers who take a broad view of the health care system are faced with mounting evidence that hospital consolidation has meant more negatives than positives for consumers so far,” the researchers argue.