By KEN TERRY
Far more attention has been devoted to the ways in which industry consolidation has driven up health costs than to proposals on how to remedy the situation. But the introduction of Medicare for All and Medicare for More bills—however dim their short-term prospects are—has changed the terms of the debate. It is time to think about how we can eliminate the market power of health systems without causing harmful dislocations in health care and the economy.
Before we get to that, here are the main facts about consolidation: As a handful of health insurers have become dominant in many markets, health systems have done likewise in order to maintain or improve their negotiating positions. That has proved to be an effective strategy in many cases. Even dominant health plans cannot do without the largest hospital systems in their areas, especially when they employ many of the local physicians.
According to a Kaufman Hall report, 90 hospital and health system deals were publicly announced in 2018. This was a decline from the 115 deals unveiled in 2017, but the average size in the revenue of sellers hit a high of $409 million.
The biggest provider mergers are staggering in scale. In February 2019, for example, Catholic Health Initiatives and Dignity Health formed a new organization called CommonSpirit Health, which has 142 hospitals, 150,000 employees and nearly $30 billion in revenues. The union of Chicago-based Advocate Health Care and Wisconsin’s Aurora Health Care in April 2018 created a giant with 27 hospitals and $11 billion in revenues. A month later, Atrium Health (formerly Carolinas Healthcare System) joined with Wake Forest Baptist Health to form a system with 49 hospitals and combined revenues of $7.5 billion.
