Research has identified provider consolidation as a significant cost-driver. While hard to quantify, there appears to be consensus that provider consolidation leads to higher prices and only minimal gains, if any, in efficiencies, with most of the research focusing on hospital providers.
Some have suggested that potential benefits of provider consolidation include streamlined administrative functions, clinical integration, higher quality care and better health outcomes, cost savings and advanced technology acquisition. However, research examining post-merger efficiencies shows minimal improvements. Furthermore, research suggests these potential efficiencies come at the cost of higher prices to consumers and less process innovation.
Possible Solutions to Negative Effects of Provider Consolidation
Several approaches exist to prevent anticompetitive practices in provider consolidation:
Provider mergers are a significant driver of healthcare costs. Advocates should urge their state AG, the FTC, and the DOJ to carefully scrutinize proposed provider mergers. In addition, research is needed to better understand the impact of newer consolidation models on prices, innovation and consumer choice.