With patient access and affordability at stake, lawmakers are turning their attention to alleged hospital monopolies and the increasingly alarming rate of hospital consolidation — and not a moment too soon.
As hospitals and health systems continue to target smaller, community-based physician practices with anti-competitive tactics, patients are the ones caught in the middle.
Hospital consolidation has reached new, concerning heights. Over the last 25 years, hospital mergers have reduced the number of hospitals from about 8,000 to just over 6,000. Further, there’s strong evidence that hospital consolidation restricts patients’ access to quality care and increases healthcare spending.
The Medicare Payment Advisory Commission (MedPAC), an independent federal agency that advises Congress on Medicare, reported that by 2017, a single hospital system accounted for over 50% of inpatient admissions in most markets. This rapid consolidation led a bipartisan coalition of 26 attorneys general to ask a federal appeals court to restrict hospital mergers. Similarly, across-the-board consolidation recently led HHS to name the agency’s first-ever “chief competition officer,” tasked with incentivizing competitive practices in healthcare.
Ultimately, however, hospitals’ market power has gone largely unchecked, resulting in fewer physicians owning their own practices. According to a report by the American Medical Association, only 47% of physicians worked in private practices in 2022, down from 60% in 2012.
This trend is particularly notable in the field of oncology, as 658 community-based oncology practices were acquired by hospitals from 2008 to 2018, while 432 shut their doors altogether.
Amplifying the severity of the trend, well-documented allegations suggest that hospitals and health systems nationwide are also using their growing market power to engage in anti-competitive behavior, including patient steering, referral restraints, and strong-arm negotiating tactics that result in higher costs and limited access to care for patients.
In Wisconsin, for example, a class-action antitrust lawsuit claimed that one local health system used private practice acquisitions, referral restraints, non-compete agreements, and gag clauses to stifle competition from other healthcare providers. The health system allegedly used “coercive contracting practices” to limit the use of tiering (in essence pushing vendors into an all-or-nothing agreement). According to the lawsuit, if a vendor wants to include one of the system’s facilities or providers in its network, then it must include all of the system’s facilities or providers. These practices are generally used to diminish competition, forcing patients and employers to pay more for the same services.
Another lawsuit in North Carolina alleges that one health system used acquisitions to hike prices across its facilities. In Buncombe County, the most populous county in western North Carolina, the health system now controls approximately 90% of the healthcare market; the lawsuit alleges that this essentially gives them free rein to dictate prices, while undermining quality as a way to cut costs. Similarly, in Connecticut, another local hospital system is embroiled in a class-action complaint alleging that the healthcare system has restricted referrals to other lower-cost providers, effectively restricting patients’ access to independent care.
In yet another instance, Alliance Cancer Specialists, a community-based oncology practice in Pennsylvania, recently alleged that it experienced similar anti-competitive behavior firsthand. According to the complaint, after the plaintiff rebuffed an acquisition attempt by a large health system, the system has allegedly forced its physicians to refer only to its own oncologists rather than referring them to other, sometimes preferred, oncologists in community practices.
These cases underscore the devastating impact on access and affordability that hospital consolidation is having on patients, employers, and insurers. Less competition is harmful to consumers. But for patients, it can distort their quality of care and where they receive it, leading to higher costs and reduced access to vital health services, including cancer treatment.
As this issue continues to spiral out of control, federal and state policymakers must implement policies that rein in hospitals and healthcare systems’ use of these anti-competitive tactics. Through common-sense reforms, we can ensure access to high-quality, affordable, and local healthcare for patients nationwide.
Marcus Neubauer, MD, is an oncologist and Chief Medical Officer at The US Oncology Network.
Disclosures
Alliance Cancer Specialists is part of the US Oncology Network.
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