Health Care Consolidation: Trends, Impact and Regulation

November 20, 2015

In 2014, there were a total of 1,299 mergers and acquisitions in the health care sector – a record number, up from 1,035 the year before. This briefing will discussed the driving forces behind this recent increase in consolidation; the scope and extent of consolidation among doctors, hospitals and insurers; implications for consumers and other stakeholders; and the roles of the Department of Justice and the Federal Trade Commission.

If you were unable to attend the briefing, here are some key takeaways:
Eric Schneider, senior vice president for policy and research, The Commonwealth Fund
Concern has been growing that large, newly-merged companies facing fewer competitors will result in higher premiums, deductibles, and co-pays for consumers, Eric Schneider stated. The four largest insurers currently control 80 percent of the market.

Thomas (Tim) Greaney, Chester A. Myers Professor, co-director, Center for Health Law Studies, Saint Louis University School of Law
Evidence is growing that large insurers get discounts from hospitals, but do not pass them onto consumers, Tim Greaney said. The Department of Justice has found that new insurers have trouble securing price discounts from hospitals without already having a good consumer base, thus creating a barrier to entry, he added.

Laurence Baker, professor of health research and policy, Stanford School of Medicine
Provider practices that provide more expensive services are also more concentrated, which can be demonstrated using the Hirschman-Herfindahl Index (HHI) to compare different specialties of medicine, Laurence Baker said. The median HHI for internal medicine practices is just under 1,000, while radiation, oncology, thoracic surgery, and cardiac surgery practices have median HHIs between 5,000 and 6,000, indicating less competition. Prices for internal medicine intermediate office visits are about $12 higher for practices in the 90th percentile for HHI, compared to those in the 10th percentile, but there is very little evidence suggesting any impact on quality or outcomes, he added.

Bruce Vladeck, senior advisor, Nexera, Inc., and former Medicare and Medicaid administrator
High performing health systems tend to favor highly integrated models of care, which is in opposition to most anti-trust legislation, Bruce Vladeck stated. Consolidation also prevents hospital closures resulting from decreased rates of in-patient utilization, he added.

Paul Ginsburg, Norman Topping Chair in Medicine and Public Policy, Schaeffer Center for Health Policy and Economics, University of Southern California
Markets are already concentrated, and more consolidation is presenting challenges to small insurers and physician practices, Paul Ginsburg stated. Using network strategies to shift volume from high priced to low priced providers will result in savings. Narrow networks result in premium reductions of about 15 percent, but still have to deal with the challenge of meeting network adequacy requirements, he added.

Ed Howard of the Alliance for Health Reform and Eric Schneider of The Commonwealth Fund co-moderated.

Follow the briefing on Twitter: #HCconsolidation

Contact: Marilyn Serafini (202)789-2300

The event was sponsored by the nonpartisan Alliance for Health Reform and The Commonwealth Fund.


Full Transcript (Adobe Acrobat PDF)

Speaker Presentations

Paul Ginsburg Presentation (Adobe Acrobat PDF)
Eric Schneider Presentation (Adobe Acrobat PDF)
Lawrence Baker Presentation (Adobe Acrobat PDF)
Thomas Greaney Presentation (Adobe Acrobat PDF)

Event Details

Agenda (Adobe Acrobat PDF)
Speaker Biographies (Adobe Acrobat PDF)

Event Resources