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Studies Continue Pointing to Physician-Led Hospitals as a Solution to Address Consolidation

May 6, 2024

A new round of studies related to health care consolidation were released in April, and one study specified physician-led hospitals as a tool to counter consolidation.

Hayden Rooke-Ley, a senior fellow at the American Economic Liberties Project, highlighted physician-led hospitals as a tool to counter consolidation in his April 2024 study:

Promote Physician and Public Ownership: States and the federal government can promote physician-led ownership through direct investment and through the tax code. For example, Indiana recently enacted a tax credit for independent physician-led practices. States also have numerous tools to publicly acquire struggling practices (and hospitals). For example, health and hospital districts exist in localities across the country as a means of locally financing and owning health care infrastructure. These districts are locally governed, often directly elected or appointed by the county, and they have the authority to issue bonds and raise revenue for the purpose of financing or providing health care. For struggling practices or hospitals, this could be an alternative to selling to private equity or a national conglomerate. Further, states and the federal government should increase funding for local public health departments, which would support efforts to directly provide medical care.

Meanwhile, “New Evidence on the Impacts of Cross-Market Hospital Mergers on Commercial Prices and Measures of Quality” provided the latest evidence that hospital consolidations lead to price increases:

Overall, this study provides further evidence that cross-market hospital mergers lead to price increases and novel findings of no quality effect and the impact of serial acquirers on the price effect. More antitrust scrutiny of these mergers—particularly those of serial acquirers—appears prudent given the current state of highly concentrated hospital markets in the United States.

Physician-Led Hospitals as a Solution

The latest studies related to consolidation complement a February 2023 competition policy paper by anti-trust experts.

Acting in their personal capacity, attorneys from the U.S. Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition and physicians from the Johns Hopkins University School of Medicine and the American Medical Association (AMA) asserted in a February 2023 competition policy paper:

For those in the U.S. health policy community concerned about consumer harms resulting from the growth of health system market power and the shrinking role of physicians in leading and designing patient care, our paper urges a reevaluation of the prohibition on new or expanded POHs. POHs present an opportunity to inject more competition into patient/consumer markets, U.S. payor markets, and markets for physician services. Competition in these markets is vital for reducing costs and improving quality. This not only benefits healthcare consumers—which eventually includes all of us, but also taxpayers providing publicly-financed health benefits that cover nearly one in two Americans. It also benefits physicians through increased competition for their services and greater opportunities for entrepreneurship and innovation in patient care.