Benefits of consolidating hospitals

Prices increased almost 20% in concentrated markets.The effect of consolidation on quality was mixed whereas there was no evidence of cost reduction or clinical gains from physician- hospital consolidation.A 2006 report concluded that increases in hospital concentration invariably led to an increase in hospital prices often up to 20%, which are then passed on to consumers in the form of higher premiums and out of pocket costs [13].A price increase of 6-10% was noted in a study of 500 hospital mergers between 20 occurring in the same state but different local markets (cross market mergers) [14].

Kaufman, Hall & Associates reported 102 deals in 2016 and reported an 8% increase in the first quarter of 2017 compared to the same period in 2016 [4].Earlier reports suggested that cost and price growth were somewhat lower for merging hospitals compared to non-merging hospitals when followed longitudinally [9].Antwi and colleague suggested that although rates of price growth are higher in monopolistic markets, there is no correlation between a change in hospital concentration and price growth [10].The cost of information technology, accounting and legal services, and expense of recruiting specialists can be amortized across the hospitals in the merging health systems.However, in recent years, governmental agencies such as the Federal Trade Commission (FTC) and the courts have generally regarded these claims as speculative barring empirical data.

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