How Does Consolidation Drive Prices?

Why do Americans spend so much on healthcare? According to a recent literature review, part of the reason may be due to the acquisition of private physician practices and hospital mergers. In a study of over 300 mergers, investigators found that that prices rose on average by 6% when hospitals were near to each other. As hospitals and physician practices lose billions of dollars due to the pandemic, more mergers and acquisitions can be expected. However, it remains to be seen if the higher prices are justified by higher-value care.

There are considerable difficulties in eliminating consolidation-related price increases, especially during the COVID-19 pandemic. However, the pandemic should be viewed as an opportunity to study the impact of mergers and acquisitions and how stakeholders can step in when prices are not aligned with value. Read the full report here.

(Source: Laura Tollen, August 3^rd 2020)