Will Consolidation Leave Trust Broken in its Wake?

The recent New York Times piece “When Hospitals Merge to Save Money, Patients Often Pay More“ analyzed the impact on consumers of hospitals merging at a “rapid pace”–with large systems gobbling up smaller practices in cities and rural communities. This is not anything new–the health care system has been consolidating for many years. What struck me about this piece is its timing.

With trust in the American health care system already decaying, stories that pit “Big Health” against patients will lead to a continued decline in trust. News such as this adds fuel to the notion that market power is more important than the needs of the patient and the affordability of medical care, concerns piled on top of a public already worried about the ACA and pre-existing condition requirements.

Per the article, from 2010 to 2013—a “peak period” for mergers—consolidation of hospitals led to less competition and higher prices for hospital admissions, “with prices in most areas going up between 11 percent and 54 percent in the years afterward.”

Advocates for mergers would argue that these moves could result in better access to care, higher quality of care and cheaper prices for coordinated services. However, according to Cooper et al.’s “ The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured,” published in The National Bureau of Economic Research, “Prices at monopoly hospitals are 12 percent higher than those in markets with four or more rivals.” To be sure, underserved areas can sometimes benefit when large systems acquire community hospitals. However, in the more common scenario of mergers between two larger systems, the public frequently must pay higher prices for care, as the merged system uses its increased market power to negotiate higher prices with health insurers.

For a profession that is based on an intimate relationship between patients and their health care providers, the perception that hospitals are consolidating out of greed without regard for the consequences for patients could intensify the fraying of Americans’ trust in health care.

As a nation, we are already hearing a steady narrative of the “little guy” being swallowed up by big corporations, with the rich getting richer. Society is currently facing the greatest wealth disparity since before the Great Depression. Tensions are high, as is distrust. There must be additional oversight and consideration of the downstream impact.

As Sheffler et al. suggest in their Health Affairs article, “Consolidation Trends In California’s Health Care System: Impacts On ACA Premiums And Outpatient Visit Prices,” “[t]he potential impact of hospitals’ acquisition of physician practices calls for careful and detailed examination. Improved economic and legal theories need development so that these acquisitions’ potential efficiency and quality improvement can be weighed against the costs.” If not, the price we pay will not just be financial. It will come at a price that hits at the heart of health care – trust in the patient-physician relationship.

Lisa Miller & Daniel Wolfson