JS King. NEJM 388: 1057-60. On Consolidation and Competition — The Trials and Triumphs of Health Care Antitrust Law

Key points:

• “Historically, the United States has relied nearly entirely on market competition to control prices and promote quality in health care. Yet health care markets haven’t been healthy for some time. Over the past 30 years, health care consolidation has gone largely unchecked by federal and state antitrust enforcers, which has resulted in higher prices, stagnant quality of care, and limited access to care for patients.”
• Consolidation has been both horizontal (eg. two competitors merge), vertical (eg. hospital acquiring physician groups. or insurance acquiring pharmacy benefit manager) or cross-market (eg. merger of hospital in two separate regions)
• “Private-equity firms have recently invested heavily in health care providers, purchasing hospitals, emergency services and staffing companies, and specialist-physician groups, such as anesthesiology groups…Studies have found that acquisitions by private-equity firms have led to consolidation and increases in hospital charges and net income.”
• “Mergers are often justified with promises of improved quality or patient access, evidence supporting these claims is lacking.”
• “Antitrust law aims to protect consumers and competitive markets from anticompetitive practices and the harms described above. Three federal laws — the Clayton Act, the Sherman Act, and the Federal Trade Commission Act — along with legislation in nearly all states form the foundation of antitrust law.”
• “Despite these enforcement options, the U.S. health care industry is the most consolidated it’s ever been… In the 1990s and early 2000s, the FTC lost six consecutive horizontal hospital-merger cases…[subsequently] federal agencies didn’t challenge another hospital merger for nearly a decade.”

My take: Consolidation is happening in all components of health care, including hospitals, insurance companies, pharmaceutical companies and physician groups. This leads to higher costs, fewer choices and possibly staff shortages. At the same time, each segment of health care is incentivized to consolidate, in part for financial gain and in part to negotiate with other consolidated segments.

Related blog posts:

• No One Would Design U.S. Healthcare System This Way
• “How Can You Tell If You Have Good-Quality Health Care?”
• Worse Outcomes After Hospital Mergers
• Healthcare: “Where the Frauds Are Legal”
• “Gaming” U.S. Patent System by Big Pharma
• Changing Business of Medicine: Private Equity
• Changing Business of Medicine: Hospital Consolidation of Physcian Practices
• “Socialism” is Already Here & Increasing in U.S. Health Care
• “Health Insurance Is Broken”