Consolidation Threatens Competition in Health Care, Hurting Consumers 

By Consumers for Quality Care, on June 12, 2024

Health care mergers do little, if anything, to benefit consumers. In fact, these mergers have been found to decrease competition, raise costs, and reduce the quality of care, according to reporting by The Wall Street Journal.  

Consumers have little choice in picking their own doctors or their health insurer, as health insurance companies pick what health system they will contract with. But now, health systems are merging practices through both vertical and horizontal integration. This consolidation has led to monopolistic practices that decrease competition, sending health care premiums skyrocketing, and hurting consumers. 

The Federal Trade Commission (FTC) under the Biden administration has made a concerted effort to scrutinize health care mergers but lacks the resources to examine all these proposals. In the last 20 years, over 1,000 health care mergers have occurred, but the FTC has acted against just 13 proposals during that period. “The FTC is underfunded, it’s not enforcing enough and, as a result, lots of mergers that raise prices are happening,” says Zack Cooper, an Associate Professor of Public Health at the Yale School of Public Health.  

Independently owned physician offices, which offer better care at a lower price, often compete with big health systems for patients. Recognizing that these offices were cutting into their bottom line, these health systems have started to acquire once independent physician offices. Now, three out of four doctors work either for a hospital or a corporate owner. Once affiliated with a larger hospital system, these physician offices can charge facility fees, extra costs that may pad hospital profits but don’t improve patient care.   

In the case of the merger between Advocate Aurora Health and Atrium Health in 2022, the FTC didn’t challenge the deal because the health systems did not have any geographic overlap. The deal created a $27 billion health care system that spanned from the Midwest to the Southeast. Studies have shown that after these types of deals, prices at consolidated hospitals rose 13 percent in six years, as compared to prices at hospitals that weren’t part of a merger.  

Decreased competition hurts consumers, often leading to fewer options for care and higher out-of-pocket costs. CQC urges regulators and lawmakers to scrutinize mergers in the health care system and work to ensure that consumers do not foot the bill for anti-competitive practices.