posted by AHIP
on June 12, 2019
On June 12, 2019, the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights held a hearing on “Competitive Implications of Vertical Consolidation in the Healthcare Industry.” AHIP submitted a statement for the official record of this hearing.
Our statement emphasizes that one major cause of rising health care costs is vertical provider consolidation—when more and more of a region’s doctors and medical experts work for the same hospital or health system. We highlight research findings showing that when health systems in a region get bigger and squeeze out competition, prices go up for consumers:
A study published by the Journal of Health Economics examined what happens to prices when hospitals acquire physician practices and found that, following such acquisitions, the prices for services provided by the acquired physicians increased by an average of 14.1%.
A study published by Health Affairs found that “an increase in the market share of hospitals with the tightest vertically integrated relationship with physicians—ownership of physician practices—was associated with higher hospital prices and spending.” The authors further explain that “vertical relationships can be a way for physicians and hospitals to bundle their services together and charge insurers higher prices.”
Another study published by the Journal of Health Economics addresses the impact of hospital/physician integration on hospital choice. This study cautions: “We find that a hospital’s ownership of a physician dramatically increases the probability that the physician’s patients will choose the owning hospital. We also find that patients are more likely to choose a high-cost, low-quality hospital when their physician is owned by that hospital.”
Our statement offers recommendations to address concerns about anti-competitive provider consolidation: