Hospitals merging leads to higher health care prices, according to research from Gaynor in 2012 and a 2018 analysis from researchers at the University of California Berkeley.
Of course, Gaynor said, that’s bad news for anyone who does not have health insurance and doesn’t have an insurer negotiating prices on their behalf, but it also affects people whose employers and health insurance providers pay for care. He said the evidence shows that when health insurance companies have to pay more, their premiums go up, employers pay more for those premiums, and workers get paid less than they would have otherwise.
“Like everything else in health care … there’s this roundabout path that’s really not visible directly to us, but nonetheless, it does come back and end up coming out of the wallets of people who have the health insurance,” Gaynor said.
Hospital mergers and acquisitions also lead to worse patient experiences, with no significant changes in the rates at which patients get sent back to the hospital or die, and inconclusive effects on health care quality, according to research published at the start of the year by the New England Journal of Medicine.
One of the co-authors, health economist Leemore Dafny, testified before a House subcommittee in 2018, saying that although each case should be evaluated on its own merits, “in a nutshell, research to date suggests that consolidation in the health care industry, on average, has not yielded benefits to consumers.”
Gaynor said you can look to the dysfunctional health care industry in Pittsburgh a few years back as “a poster child for the rest of the country on what you don’t have to have happen.”
In 2012, Highmark, a health insurance company, bought a health network so it could provide health services and insurance coverage. That also made Highmark a competitor to UPMC, which also provides health services and insurance coverage. It started a bitter feud between the two giants that would have led to patients with Highmark insurance losing access to UPMC providers if not for a deal reached a few days before a deadline, after the Pennsylvania attorney general took the matter to court.
“If there had been multiple players instead of a market dominated by a single large entity on both sides, this would have been far less likely,” Gaynor said.
As hospitals continue to merge, regulators say they will be more critical of them. Last month, the California attorney general proposed a bill that would allow that office to review health facility transactions before they happen.
Earlier this year, the FTC said it will monitor mergers more closely. In 2017, two hospital systems in Chicago lost a court fight with the commission and called off a merger.
Claire O’Hanlon, an adjunct policy researcher at the Rand Corporation who specializes in health care systems, said the FTC is a law enforcement agency with limited resources, so it has to use those resources for whatever will have the biggest impact.
“Sometimes, the biggest impact is by blocking something that they think is going to truly be harmful to a community, or that they can use as precedent to stop other potential things elsewhere.”
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Editors note: This article was updated to provide more current figures for federal relief aid to Einstein Medical Center Philadelphia.
WHYY is one of over 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push towards economic justice. Follow us at @BrokeInPhilly.