Study: Relationship Between Hospital Mergers, Price Increases Often Overstated
Jan. 28—A recent study shows “no consistent statistical relationship” between consolidation and hospital price increases.
The study, conducted by the Center for Healthcare Economics and Consulting (a division of FTI Consulting, Inc.) with funding from the Federation of American Hospitals, a for-profit hospital trade association, challenges conventional wisdom about the impact of consolidation on hospital prices.
For example, reports that hospital mergers raise prices are “often based on outdated studies from as far back as the 1990s,” according to a release on the study. And although previous studies suggest that consolidated hospitals gain more bargaining power with insurers and stifle competition, “An analysis of recent realignments shows the vast majority of mergers do not impede market competition,” according to the release.
Previous analyses of price variation after consolidation have tended to be based on limited data and narrow samples, according to the report on the study. For example, studies reporting significant price increases (20 percent or more) post-merger “are specific cases involving selected transactions or data from mergers in highly concentrated markets and thus are not generalizable to all mergers and acquisitions or even to those in highly concentrated markets,” according to the report.
Benefits of mergers cited by the report’s authors include enhanced access, improved value, and increased efficiency.
“Overall, the impact of hospital realignment—particularly in the challenging environment today—is much broader than what is currently being discussed,” according to the report.
Publication Date: Tuesday, January 28, 2014