Unbiased Analysis of Today's Healthcare Issues

The Effect of Hospital Consolidation on Prices and Quality

Written By: Jason Shafrin - Sep• 20•12

An interesting report from the Robert Wood Johnson Foundation summarizes the literature describing the effect of hospital concentration in a market on prices and quality.  The general consensus from the literature is the following:

  • Increases in hospital market concentration lead to increases in the price of hospital care
  • Hospital mergers in concentrated markets generally lead to significant price increases
  • At least for some procedures, hospital concentration reduces quality
  • Hospital competition improves quality under an administered pricing system (e.g., National Health System in England)
  • Competition improves quality where prices are market determined, although the evidence is mixed

A summary of these findings is available here.

Close to my home, a study by Tenn (2011) found that the San Francisco Bay Area merger of Sutter and Summit Healthcare systems lead to price increases (28% to 44%) that were among the largest of any comparable hospital in California.  The authors concluded that the transaction may have been anti-competitive.

The RWJF study also concludes what I have been saying over the past years, the Accountable Care Organizations (ACO) promoted by the Affordable Care Act (ACA) may not improve quality and are likely to increase the price of healthcare.

Sources.

 

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Comments

  1. […] 25, 2012 by admin  Jason Shafrin over at the Healthcare Economist points to this recent paper over at the RWJF. Interestingly the authors find that hospital […]

  2. […] Shafrin from Healthcare Economist steps to the mound to throw the first pitch, officially starting this week’s series and with a […]

  3. Sam says:

    Jason, unfortunately you have the wrong link posted above. As posted it directs to the original hospital consolidatoin report dated 2006. For the 2012 update of the report, use this link:

    http://www.rwjf.org/en/research-publications/find-rwjf-research/2012/06/the-impact-of-hospital-consolidation.html

  4. Jason Shafrin says:

    Updated.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>