Ten Things to Know About Consolidation in Health Care Provider Markets

Mergers and acquisitions involving hospitals and other health care providers are drawing attention from federal and state regulators, including the Federal Trade Commission, and policymakers amid concerns that such consolidations can reduce competition and contribute to the high costs of health care.

A new KFF brief examines and summarizes the evidence about consolidation among health care providers as more community hospitals become part of a larger system, and more physicians are in practices owned by hospitals and systems.

Drawing from a wide variety of sources, the brief offers insights into the pace of consolidation among providers, its impact on prices and quality, and policy proposals aimed at reducing consolidation and increasing competition, such as:

  • Following a wave of consolidation in the early- and mid-1990s, there were 1,573 hospital mergers from 1998 to 2017 and another 428 hospital and health system mergers announced from 2018 to 2023.
  • The share of physicians working for a hospital or in a practice owned at least partially by a hospital or health system increased from 29% in 2012 to 41% in 2022. In addition, a growing share of physician practices are owned by other corporate entities, including insurance companies.
  • While consolidation may allow providers to operate more efficiently, a substantial body of research shows that it generally leads to higher health care prices. The evidence overall does not show clear gains in access or quality. 
  • Some studies have found that hospital consolidation can lead to lower wages for some skilled workers, such as nurses. The broader evidence on employment and compensation effects is limited, including the extent to which mergers that prevent closures could preserve jobs.
  • State and federal policy proposals to address consolidation and increase competition include strengthening antitrust enforcement, reducing financial incentives for provider consolidation, increasing price transparency, and allowing more providers to enter the market. Each of these proposals would involve tradeoffs, and the extent to which they can reduce health costs is unclear since many markets already are highly concentrated.

The brief is part of KFF’s expanding work examining the business practices of hospitals and other providers, and their impact on costs and affordability. 

Source link