Stop hospital consolidations to lower health care prices for all Americans

With 2023 bringing divided government and inflation to levels not seen in decades, lowering the cost of healthcare is a political and moral necessity. Over the years, Americans have discovered that insurance coverage alone does not equal access, and that despite near-universal health insurance coverage, more than one in five Americans still struggle to pay for health insurance, according to the US Census Bureau. ‘health care. To be treated, patients must be able to afford the care they need.

Half of the nation’s health care expenditure is spent on care provided in hospitals and clinics, both markets suffering from the evils of monopoly. In a newly published paper, we set out pragmatic solutions to address hospital monopoly power, with the aim of reducing costs for patients.

Last year, Senators Mike Lee (R-Utah) and Amy Klobuchar (D-Minn.) held a hearing on hospital consolidation, highlighting the rare problem uniting both Democrats and Republicans in today’s fractious political environment . According to the Kaiser Family Foundation, the market power of hospitals has now reached a critical level with 90% of metropolitan statistical areas considered highly concentrated for hospital care and hospitals driving even greater consolidation by buying physician practices. The monopoly is the natural product of more than 1,500 mergers in 20 years and a federal policy conducive to consolidation.

Research clearly demonstrates the evils of monopoly: hospital consolidation leads to higher insurance premiums, higher prices for hospital services, and greater consumer cost-sharing, all while driving reductions in the patient experience. Patients know what that means: heavy bills that come months or even a year after receiving treatment.

Refreshingly, Congress is before us with practical proposals to sustain competition in care delivery that benefits both patients and physicians.

Unfortunately, at the same time, healthcare systems have become more creative and creative in how they deliver care to patients. Dominant systems today include so-called “anti-steering” or “anti-tiering” contractual clauses that prevent health plans from referring patients to other low-cost, high-quality physicians; a 2018 case brought by the Justice Department’s Antitrust Division against Atrium Health highlighted this practice. To identify the prevalence of these practices, policymakers should direct the Federal Trade Commission and the Justice Department’s Antitrust Division to study these practices and equip the Federal Trade Commission with the authority to address hospital anticompetitive behaviors such as these.

Additionally, antitrust researchers and agencies should be empowered to focus on target areas requiring federal competition enforcement through the regular publication and dissemination of a state competition index. A state competition index would include data on mergers, licensing requirements, and concentrations across service markets in addition to making source data transparent.

While medical procedures can often be performed safely and completed in an outpatient setting at lower cost and discomfort to the patient, government regulations often mandate that procedures be provided only in an inpatient setting, thus reinforcing the dominance of the hospital market in load. By preventing this unnecessary interference in medical decision-making, Congress can prevent regulatory agencies from specifying the site of the service and allow patients and doctors to immediately benefit from medical advances and decide when, where and how to provide care.

Finally, Congress can promote the growth of new small businesses. In 2010, as part of negotiations to pass the Affordable Care Act, the hospital industry convinced Congress to enact a ban that prevents new doctor-owned hospitals from participating in Medicare. Acknowledged by the CEO of the Federation of American Hospitals in a 2021 advisory board interview, this was a landmark, publicly proclaimed victory that banned hospital industry competitors.

The ban on new facilities participating in Medicare – which can account for up to a third of a hospital’s revenue – has taken away the possibility of hospital ownership by doctors, i.e. those with the greatest knowledge of patient care. With recent research showing that doctor-owned hospitals can improve quality and reduce costs, policymakers should support House and Senate bills to correct this fallacy.

With hospital monopolies screwing over Americans, now is the time for sensible reforms to promote choice and competition. It is our profession’s prescription for a better system for all.

Brian J. MillerMD, MBA, MPH is an assistant professor of medicine and business (courtesy) at Johns Hopkins University and a non-resident fellow at the American Enterprise Institute.

Jesse M. EhrenfeldMD, MPH is the senior associate dean of the Medical College of Wisconsin and the president-elect of the American Medical Association.

The views expressed herein are the authors’ own and do not necessarily reflect those of their employers.

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