Health Care Consolidation and System Reform
Health Care Consolidation: Published Estimates of the Extent and Effects of Physician Consolidation
Government Accountability Office
In 2023, Congress directed the Government Accountability Office to study the extent of healthcare consolidation, the potential role of private equity, and the effects on healthcare quality, access, spending, and costs.
The GAO reviewed peer-reviewed empirical studies and reports from January 2021 through July 2025, and interviewed stakeholders, including physicians, hospitals, insurers, private equity firms, retail companies, and employees.
The article cited available data sources, including PECOS, insurer claims data, physician survey data, and other proprietary data. However, the article noted limitations in the data sources, including variations in dataset categorizations, reliance on survey responses, and unclear ownership shares.
The GAO found that physician consolidation has increased; however, it is unable to determine the specific proportions of private equity, hospital, and corporate-backed acquisitions. Many studies suggest that a large share of physician acquisitions was backed by hospitals, with variations likely due to differences in survey reporting and set characterization. Some findings suggest that insurance- and corporate-backed physician consolidations have increased in recent years; however, this data faces similar variations and causes as hospital-backed acquisitions. While the GAO did not identify any estimate of retail-backed physician consolidation, they did cite several recent acquisitions.
Private equity-backed acquisitions accounted for 65% of physician practice acquisitions. Many studies have suggested that hospital-backed physician consolidation can increase costs and spending without a corresponding improvement in quality. The effects of other entity-backed consolidations on expenses, spending, and care were unclear, and no conclusive results on the impact of consolidation on access were reported.
The 25% Problem: Why Health Care Is So Expensive (And What We Can Do About It)
California Health Care Foundation
Kristof Stemikis, Catherine Teare
This article addresses a reported 25% of California Healthcare system spending that does not serve patients. Stemikis and Teare cite administrative waste, companies without competition charging unfair prices, and serious illnesses that could have been prevented with preventative care, overtreatment, fraud and abuse, and failure of care coordination as the culprits of waste in descending order. As healthcare becomes more expensive, California families are carrying more medical debt and skipping or delaying care, with impacts on their health.
The article examines the overly complex healthcare system, administrative burdens, lack of competition, and increasing prices, as well as the lack of preventative care, identifying these as the three most significant cost burdens and explaining them in greater detail.
Stemikis and Teare highlight the Office of Health Care Affordability (OHCA) and several targeted solutions OHCA is implementing, including cost growth and quality targets, reducing prior authorization costs, a statewide data exchange, addressing monopolistic pricing, and increasing investments in primary and preventative care.
Healthcare Pricing
How States Are Using Hospital Price Caps To Save Money
Health Affairs Forefront
Nathan Hostert, Roslyn Murray, Christopher M. Whaley, Erin C. Fuse Brown
States have implemented various policies to target hospital costs, the largest driver of increases in commercial healthcare spending. In addition to regulation consolidation, which has been linked to price increases, some states have implemented price caps to control pricing and discourage future consolidation. These caps range from price controls on employee health plans to limits on the entire healthcare market.
The article examines Oregon, where the legislature implemented the first employee health plan price cap, and finds that the cap did not increase prices in the non-state employee market and reduced out-of-pocket hospital spending for employees. Washington was the second to implement a price cap and introduced reference-based payment floors for certain services. Colorado, New Jersey, Nevada, and several other states have begun to implement reference-based hospital price caps through administrative action.
The article notes that reference-based hospital price caps could allow room in state budgets to allocate to Medicaid programs. States affected by market failures have seen intervention through commercial price caps, including Vermont and Indiana. The article examines the price caps in Vermont and Indiana, as well as the goals of these states, and provides recommendations on their impact on the financial health of hospitals.
Insurer market competition and negotiated prices for elective hospital-based procedures
Surgery
Mitchell Mead, Clifford Sheckter, Andrew M. Ibrahim
This article assesses the impacts of insurer consolidation on elective, hospital-based surgery prices. The authors assess hospital prices from acute care hospitals, including insurer-negotiated costs. They then evaluated price variation for elective procedures across several insurers, adjusted costs based on geographic region, reimbursement type, and insurer negotiation power.
They found that hospitals reported an average of 309 prices across nine procedures negotiated with Medicare and Medicaid plans, and commercial insurance. Insurer market competition varied greatly, and all elective procedures were more expensive when there was less competition between insurers. Market-leading insurers were able to offer lower prices in low-competition markets compared to high-competition markets. In contrast, non-market-leading insurers negotiated higher costs in these low-competition markets.
Overall, the article reveals a significant discrepancy in negotiated prices for elective procedures among insurers. Market-leading insurers are able to secure better deals in low-competition markets. Understanding which insurers have more authority to negotiate lower prices under varying conditions can help improve understanding of the insurer market. The authors address several limitations of their study and encourage the use of their research to regulate healthcare costs and promote price transparency.
Private Equity
Hospital Staffing and Patient Outcomes After Private Equity Acquisition
Annals of Internal Medicine
Sneha Kannan, Joseph Dov Bruch, José R. Zubizarreta, Jennifer Stevens, and Zirui Song
Current research correlates private equity acquisitions with increased hospital charges, income, and hospital-acquired adverse events. This article looks to examine the relationship between hospital staffing and patient outcomes, and private equity acquisition.
This article examined changes in hospital staffing, salary expenses, and patient outcomes following private equity acquisition in the emergency department and Intensive Care Units. The authors used data from the Hospital Cost Report to track hospitals three years before and after acquisition. They also matched control hospitals and tracked patient demographics.
The article found that private equity hospitals reduced staffing and total salary costs, while hospital hiring and expenses increased in the comparable control group. Staffing and salary reductions were especially notable in emergency and intensive care departments for private equity hospitals. Furthermore, in-hospital mortality rates increased at private equity hospitals, while they decreased at control hospitals. The article notes that there were no statistically significant differences in trends prior to acquisition relative to the control hospitals.
The article's findings support prior research that suggests adverse events and worsened patient experiences are associated with private equity acquisitions. The authors suggest that reducing salaries could be a key factor in explaining poorer performance.
Hospital- And Private Equity–Affiliated Specialty Physicians Negotiate Higher Prices Than Independent Physicians
Health Affairs
Alexander Philips, Nandita Radhakrishnan, Christopher Whaley, and Yashaswini Singh
This article aims to assess the impact of healthcare consolidation by hospitals and private equity on physician costs by comparing physician prices following hospital and private equity-affiliated acquisitions with those of independent specialists. The current understanding of physician employment and wages is limited by a lack of systemic data and disclosure requirements, and a lack of transparency in negotiated healthcare prices. The article addresses further limitations, including being unable to determine causality, underreported data due to the lack of reporting mandates, external variables, and alternative forms of compensation.
The authors examine the share and geographic distribution of cardiologists and gastroenterologists who were affiliated with hospitals or private equity firms using Transparency in Coverage data and assess how negotiated prices were paid for physician services.
The article found that most cardiologists and gastroenterologists were employed by hospitals rather than private equity firms. Those employed by hospitals were concentrated in the Midwest, while specialists affiliated with PE were concentrated in the Southwest.
Both hospital-affiliated cardiologists and gastroenterologists negotiated higher prices than their private equity counterparts, and all negotiated higher prices than those in independent practice.
As more physicians consolidate their practices, the article aims to provide further insights into the effects of consolidation and recommends increased antitrust scrutiny as consolidation continues to grow.