A cancer patient may live in a city with four cancer groups, but only one accepts his insurance—the one with his insurer. A young couple could face huge bills after their baby is born because their insurance company agreed to the health system's rates in exchange for a contract with obstetricians across the country. A woman may have to pay more money than she can afford for basic laboratory tests at the hospital—inflated rates accepted by her insurance company so that her clients would have access to the system's children's hospital elsewhere in the state.
And even well-insured patients face unaffordable bills in an era of high-deductible health plans, narrow insurance networks and 20% cost-sharing.
Health systems, physician groups, and insurers are merging and consolidating into ever-larger giants. While these mergers are good for business, research shows that growing consolidation in health care is driving up prices, worsening patient outcomes and reducing choice for people who need care. A recent study found that six years after hospitals acquired other hospitals, they raised prices by 12.9%, with hospitals that were involved in multiple acquisitions raising prices by 16.3%.
These new deals represent “mutual monopolization,” said Barack Richman, the Alexander Hamilton Professor of Business Law at George Washington University. “It's not competition. It's more like collusion. They don't care about price.”
These market factors contributed to the dose of the antiviral drug Paxlovid administered in the hospital. costs 4500 dollars; magnetic resonance imaging costs $15,000; and joint replacement cost $100,000.
President Donald Trump has talked about the burden of health care costs since his first campaign, but he has signaled that his administration's regulators are less willing than his predecessor's to interfere with health care mergers.
This summer he recalled President Joe Biden 2021 directive that all federal agencies are ensuring markets remain competitive, moving away from Biden's more expansive interpretation of antitrust laws. And in a strongly worded statement after the FTC took office, Trump-appointed Chairman Andrew Ferguson criticized his predecessor Lina Khanimplying that she had exceeded the agency's legal authority, as well as criticizing what he called her “clumsy” and “breathless” rhetoric and her focus on private equity intrusion into health care.
What this will mean in practice is unclear.
In an interview with KFF Health News, Daniel Guarnera, director of the Federal Trade Commission's Bureau of Competition, said FTC and Justice Department officials have approved guidelines issued by the Biden administration, which he characterized as a “framework” for companies planning to merge.
Advanced merger guidelinesreleased in 2023, first focused on a wide range of new types of anticompetitive practices that have become commonplace in the health care industry, such as hospitals and private equity firms buying doctors' offices and insurance companies owning so-called specialty pharmacies for dispensing complex and often expensive drugs.
Guarnera noted that regulators' strongest tool is to convince a judge that mergers violate the Clayton Antitrust Act, a law that is the basis of antitrust law. But administrations may interpret the law differently, and it is unclear what cases the Trump administration's Federal Trade Commission will decide to pursue.
“The Biden administration has tried to be more innovative,” he said. Erin Fuse Brown Professor of Health, Policy and Practice at Brown University School of Public Health. “The Trump administration has signaled a more traditional approach—that it is unwilling to push the envelope.”
In the battle for profits between insurers and providers, each side insists it needs to get bigger to have influence in the negotiations that determine health care prices. However, data shows that the prices that make sense in industry-level transactions have little to do with the actual cost of the services involved. Instead, they are simply data points in large-scale calculations that, at best, reflect the balance of power between warring parties.
Under Trump, the Federal Trade Commission has already sued to block two medical device mergers and has continued the Biden administration's challenges to individual drug patents.
“Helping to improve the health care system while ensuring more and better competition is a very, very high priority for us at the FTC,” Guarnera said, noting that health care has “an enormous impact on both Americans' pocketbooks and their wealth.”
However, it is much more difficult to cope with larger enterprises, and although the number of new mergers has decreased earlier this year As companies navigate the uncertain impacts of tariffs and interest rates, consolidation continues.
Recent Becker Hospital Review Article identified “28 large health systems that are getting larger,” noting, “This is not an exhaustive list.”
For example, in May Northwell Health of New York merged with Nuvance in Connecticut will become a giant with 28 hospitals and more than 1,000 outpatient clinics. This was a more traditional merger, with hospitals in the same region joining together to expand their reach and increase their market power.
Meanwhile, companies are building powerful forces never seen before in health care by making smaller purchases that aren't expensive enough to trigger federal oversight. They include so-called vertical mergers, which bring together companies with different functions in the same industry—most often hospital systems or insurance companies buying physician practices or specialty pharmacies.
For example, UnitedHealth Group, world's largest healthcare companynow owns health insurance plans; doctors and other health care providers; data and analytics services; payment systems; Pharmacy Benefits Manager; and the pharmacies themselves. Jonathan Kanter, Biden's Justice Department chief of competition, compared the UnitedHealth merger to Amazon.
Likewise, hospital systems and private companies – often private equity firms – are increasingly expanding their presence in different regions, acquiring hospitals, medical practices and surgery centers. This type of consolidation, known as cross-market mergerallows companies to amass vast collections of doctors—and significant market power—across the country in certain specialties, such as gastroenterology, ophthalmology, pediatrics or obstetrics.
Research shows that a change in ownership means a change in prices. For example, although pediatrics and obstetrics have traditionally been low-paying specialties, they represent a land of opportunity for investors as parents are willing to pay more when it comes to caring for their children.
Previously, it was relatively easy for regulators to recognize when a hospital merged with a nearby competitor to gain monopoly power, making it anticompetitive and driving up prices. Health care researchers say these new, more complex types of deals, creating more complex interactions between insurers and health care providers, are a game changer. much more difficult define.
In healthcare, even more traditional vertical consolidation can be problematic, Richman said. “Economic theory says it might be as harmless as a suit maker opening a store, but research shows it's dangerous in health care—higher prices, worse quality, less choice,” he said.
For example, patients who have Cigna health plans and need a range of higher-priced, often injectable prescriptions must use Accredo, a specialty pharmacy. the insurer bought in 2018, although the price may be better at another pharmacy.
Economists have developed computer modeling to predict when patients will face higher prices and fewer choices due to these new types of consolidation. But judges who could overturn the deals are “not convinced yet,” said Daniel Arnold, a health economist at the Brown School of Public Health.
Experts like Fuse Brown say new laws and enforcement tools are needed.
“The old laws,” she said, “simply weren’t designed to handle the complexity and new types of mergers.”
