While some health care associations criticize the Federal Trade Commission for being too assertive in banning noncompete agreements, a new study in the journal American Economic Review suggests that the FTC’s lax enforcement of antitrust laws has led to reduced competition and higher prices for hospital care.
The study, co-authored by Yale University economist Zack Cooper, Ph.D., and conducted in collaboration with researchers at Harvard, the University of Chicago and the University of Wisconsin-Madison, found that of 1,164 mergers between Of the nation’s roughly 5,000 acute care hospital mergers that occurred in the United States between 2000 and 2020, the FTC challenged only 13 of them, an enforcement rate of about 1 percent.
The investigation suggests that the FTC, using standard evaluation tools available to the agency during that period, could have noted that 20 percent of the mergers (238 transactions) were likely to cause reduced competition and increased prices.
Using data on the prices that hospitals negotiate with private insurers, the researchers found that mergers that the FTC could have questioned as predictably anticompetitive between 2010 and 2015 eventually led to price increases of 5 percent or more.
“It is clearly clear that antitrust laws have not been sufficiently enforced in the hospital sector,” said Cooper, an associate professor of health policy at the Yale School of Public Health and of economics at the Yale School of Arts and Sciences, in a statement. “We show that about 20 percent of hospital mergers between 2002 and 2020 could have easily been predicted to increase concentration, decrease competition, and increase prices.
“Since 2000, hospital prices have increased faster than prices in any other sector of the economy,” Cooper added. “The average price of a hospital admission is now almost $25,000. “We need to do more to preserve competition in U.S. hospital markets.”
Another new study in the magazine. Health services research analyzed the impacts of hospital mergers between markets on commercial prices and quality measures. Noting that the FTC has not challenged a cross-market hospital merger, the researchers found that six years after the acquisition, cross-market hospital mergers had increased acquisition prices by 12.9 percent relative to hospitals controls, but had no discernible impact on mortality and readmission rates. for heart failure, heart attacks and pneumonia.
The researchers said additional evidence is needed on the effects of cross-market mergers on price and quality at a time when more than half of recent hospital mergers have been between markets.
