The Source Team Co-Authors Research Article Examining Impacts of Hospital Consolidation Across Geographic Markets
The Source team, in conjunction with The Petris Center and Catalyst for Payment Reform, has had new research published on hospital consolidation across geographic markets. Consolidation among health systems has resulted in increased prices and caused the cost of employer-sponsored health benefits to increase much faster than inflation over the past few decades. Prior quantitative research demonstrates small, but significant price increases resulting from transactions that expand the geographic footprint of health systems, but the mechanisms by which these cross-market acquisitions raise prices is not completely resolved. The methodology of this research included interviews with market participants to better understand the experience of employers, insurers, and others when negotiating with large health systems. The research indicates that without government action, employers will be unable to restrain price increases that result from increasing market power of consolidated health systems.
On a related note, in a new podcast, Andréa Caballero, Vice President of Policy at Catalyst for Payment Reform, calls Katie Gudiksen, Executive Editor at The Source on Healthcare Price and Competition, and Brent Fulton, Associate Research Professor of Health Economics at UC Berkeley and Associate Director of the Petris Center to dissect the evolving landscape of hospital consolidation. They explore horizontal, vertical, and, crucially, cross-market mergers, providing context on their prevalence and challenging conventional wisdom around market definitions. The discussion highlights how consolidation, irrespective of type, demonstrably increases prices without corresponding quality improvements – a critical concern for purchasers.