Is healthcare consolidation "evidence-based?"

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  1. drusso

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    Blog: Hospital mergers are different (according to hospitals)

    By Melanie Evans | August 3, 2015
    When hospitals merge, what possible risks could consumers face?

    Not many, the American Hospital Association says in a blog post that asserts consumers have less to fear from hospital mergers than they do from consolidation among top U.S. health insurers.

    “Mergers enable hospitals to provide patients with what they want and demand—care that is better managed, more coordinated and focused on keeping them well,” wrote Melinda Reid Hatton, the association's general counsel.

    Mergers among health insurers, however, “are a different kettle of fish,” she wrote. “Insurers, not patients, will be the primary beneficiaries” under the pending deals that would unite Anthem with Cigna and merge Aetna with Humana.

    Not everyone is so sanguine about hospital dealmaking. Mergers in recent years have consolidated national chains and created new regional hospital giants.

    Federal Trade Commission officials said last month that the healthcare industry is no different than any other where competition is concerned. Three FTC directors, in a blog post on provider consolidation, rejected the argument that U.S. healthcare would benefit from less competition and more collaboration.

    Deals increase the risk of higher prices without the benefit of improved quality, according to a growing body of research, the officials wrote.

    The FTC has also forced partners in one megamerger to divest hospitals, and the commission has challenged other proposed and even consummated hospital mergers in recent years.

    Many agree that health insurance consolidation could also harm consumers. “I don't think there's a guarantee that bigger is better for the consumer,” Sarah Lueck of the Center on Budget and Policy Priorities told the New York Times.

    But that concern is partially because more insurance consolidation could lead to more hospital consolidation at patients' expense, Leemore Dafny, an antitrust scholar at Northwestern University's Kellogg School of Management said in the same New York Times story. “The consolidation in both of these industries has been shown to have an adverse impact on consumers,” she said.

    Dafny has argued for more tools for antitrust enforcement. New research suggests that health systems that operate across more than one market raise prices and the hospital merger frenzy of the 1990s resulted in higher prices and little consumer benefit, she wrote last year in the New England Journal of Medicine.

    “Consolidation will surely continue before we can determine whether it is benign,” she warned.

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