Consolidation Is Increasing Healthcare Costs


While many say mergers between healthcare organizations will lower costs, one medical executive believes the opposite is true.

In a Wall Street Journal essay, Suzanne Delbanco argues, “when providers consolidate, private insurers end up paying more for services. Nationwide, payments to hospitals on behalf of the privately insured are an estimated 3% higher as a result of consolidation”, citing a report from the Catalyst for Payment Reform. For example, “When two competing San Francisco Bay Area hospitals—Summit and Alta Bates —merged in 1999, hospital prices increased 28%-44%.”

This viewpoint is in stark contrast to the one put forth by the Affordable Care Act, which encourages consolidation and coordination in order to increase efficiency and lower costs.

Delbanco believes it is important to “ensure that health-care providers don't lean on exclusive contracts among themselves to stifle competition.” She points to programs like the Intensive Outpatient Care Program, which “can deliver well-coordinated, high-quality care without consolidating.”

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