Hospital consolidations in crosshairs of Biden administration

Medical Economics Journal, Medical Economics August 2021, Volume 98, Issue 08

Executive order looks at revising merger guidelines to help protect patients

As part of a sweeping executive order, President Biden addressed hospital mergers and their sometimes negative effects on patients and the health care system. The order specifies that the Justice Department and Federal Trade Commission review and revise their merger guidelines to ensure patients are not harmed by the mergers.

The administration points out that hospital consolidation has hit rural areas especially hard, leaving many patients without good options for convenient and affordable health care services. Since 2010, 139 rural hospitals have shuttered, including a high of 19 last year during the pandemic.

When rural hospitals closed, people living in areas that received health care from them had to travel on average about 20 miles farther for common services like inpatient care. For less common services, such as alcohol and drug abuse treatment, the average was 40 miles. Areas where a hospital closed also saw a decrease in the number of doctors available.

The Biden administration also pointed out that when hospitals consolidate, patients pay more, referencing a study that showed hospitals in consolidated markets charge far higher prices than hospitals in markets with several competitors. Mergers have resulted in the 10 largest health care systems controlling a quarter of the market. More closings and mergers are expected in the coming years.

According to the Kaiser Family Foundation, consolidation’s promise of greater efficiencies and better care coordination are often unmet. Evidence of the benefits of improved quality after a merger are mixed at best, and some studies suggest that market consolidation can actually lead to lower quality care. Kaiser reports that while it is difficult and time consuming to achieve true integration of care among newly merged health systems, price increases occur immediately after consolidation.

The executive order also directs HHS to support existing hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing to protect patients.