By Vanshika Narala
February 1, 2023
Source: Pritzker Health
Photo Source: Unsplash,
When you hear the word “monopoly,” you might think of the board game that ends friendships, Disney overtaking entertainment, or the latest Ticketmaster scandal. While these may elicit feelings of frustration, an overlooked monopoly that should enrage us more is the hospital industry. As the medical field sees its own monopolistic revolution, there is an increasing number of negative consequences felt by patients and providers. The last two decades have seen over 130 rural hospital closures and 1,500 hospital mergers. This has created an anti-competitive healthcare industry, with the Kaiser Family Foundation (KFF) designating 90% of metropolitan areas as highly concentrated hospital systems.
At first glance, the consolidation of healthcare might not seem problematic. In fact, it might even seem like a solution – with fewer systems, care may become streamlined and more accessible. However, consolidation decreases access, increases healthcare costs, and worsens quality of care.
These are some of the concerns voiced by doctors from Wyckoff Hospital in Brooklyn, New York. As a safety-net hospital, Wyckoff is unable to generate profits independently and hopes to merge into a larger healthcare system to survive. However, Wyckoff’s doctors worry that a larger institution will decrease the number of Medicaid patients seen and reduce most hospital operations. These are not unfounded concerns, with similar outcomes occurring at hospitals in Sharon and Windham, Connecticut. After consolidation, both hospitals lost maternity care and labor services leading to loss of critical and quality care. Forced to drive an extra 30 minutes as a result, one patient had to give birth on the side of the road due to increased barriers to care. Instances like these demonstrate that mergers diminish access and quality to amplify profit.
Beyond reduced access, KFF found highly consolidated markets resulted in significant increases in prices. In fact, Dr. David Dranove, Professor of Health Industry Management at Northwestern University, said “Health care consolidation is the No. 1 driver of health care spending inflation.” Mergers of hospitals, even non-profits, led to price increases of 6.25% – 17%, depending on the distance between hospitals. These price hikes occurred in both hospital services and cost of insurance premiums.
With all these negative consequences, it is important for our state and federal policymakers to create regulations that can combat harmful hospital mergers. A first step would be to pass legislation that decreases the margin of difference in payments from insurance companies to safety-net vs major hospitals. Currently, compared to major hospital systems, safety-net hospitals receive about a half or third of the payment for the same services. New legislation that helps with negotiations and standardization would help smaller hospitals, including safety-net hospitals like Wyckoff, turn profits and stay afloat.
Furthermore, we should increase government funding to smaller hospitals. The Coronavirus Aid, Relief, and Economic Security (CARES) Act and Paycheck Protection Program and Health Care Enhancement Act allocated $175 billion for grants to help with revenue loss. However, only about $13 billion was targeted to safety-net hospitals and only $11 billion to rural providers. The majority of the funding was not given to hospitals that were the most vulnerable to revenue loss. Therefore, we should encourage similar disbursements from the government but with stricter targets.
In addition, policymakers should remove the current ban on physician-owned facilities partaking in Medicare. Dr. Brian Miller, an assistant professor of medicine at Johns Hopkins University, who served as a Special Advisor to the Federal Trade Commission (FTC) in 2015 states that repealing this ban will increase competition as more community and specialty practices open. Healthcare providers should work with policymakers to reform these laws, as physician-owned practices decrease costs and increase the quality of care.
Lastly, the FTC and the Department of Justice (DoJ) Anti-Trust Division should play a larger role in limiting hospital consolidation. However, a lack of funds and limited power severely restrict their enforcement of anti-trust regulation on hospitals that are non-profits or located in different states or regions. With 66% of total health system mergers in 2019 involving non-profits, it is important that policymakers reform these rules to give the agencies authority over these mergers. Dr. Martin Gaynor, a professor at Carnegie Mellon University and founder of the Health Care Cost Institute, estimated that increasing their combined budget by $150 million would help DoJ block more than the 1% of mergersthey currently do. This funding would also help DoJ expand to block cross-market deals, which are becoming more common.
In order to lower costs, increase access and improve patient experiences, we must encourage our policymakers on a local and federal level to create legislation that supports smaller hospitals and prevents hospital consolidation. Monopolies in any field are harmful to the consumer. However, for some patients, monopolies in the healthcare industry are a matter of life and death.
How can such practices impact your health? How? Why?
Share the wealth of health with your family and friends by sharing this article with 3 people today.
If this article was helpful to you, donate to the Shidonna Raven Garden and Cook E-Magazine Today. Thank you in advance.