Hospital consolidation: industry vs. academe

Robert Weisman, writing in the Boston Globe:

A national study released Thursday said growing consolidation in the hospital industry is bringing a range of benefits to patients and communities, including larger and more integrated health systems that are better able to contain costs and improve care.

Funded by the Federation of American Hospitals,[*] a trade group representing for-profit health care providers, the report contradicts other recent studies that found mergers drive up costs.

Marty Gaynor and Bob Town, in a comprehensive literature review:

Hospital consolidation generally results in higher prices. This is true across geographic markets and different data sources. When hospitals merge in already concentrated markets, the price increase can be dramatic, often exceeding 20 percent.

Hospital competition improves quality of care. This is true under both administered price systems, such as Medicare and the English National Health Service, and market determined pricing such as the private health insurance market. The evidence is more mixed from studies of market determined systems, however.

Physician-hospital consolidation has not led to either improved quality or reduced costs. Studies find that consolidation was primarily for the purpose of enhanced bargaining power with payers, and hence did not lead to true integration. Consolidation without integration does not lead to enhanced performance.

Of course it is possible (not saying likely) that an industry study is unbiased. But it is very unlikely (I suspect) that one that runs counter to industry talking points will be promoted to the press. This “publicity bias” (and its close cousin, “publication bias”) is a good reason, among others, to consider a body of evidence by different investigators using different methods and data. That’s What Gaynor and Town did. I trust their findings in this area.

* Just sayin’.


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