The\u00a0Taylor Swift ticketing debacle\u00a0of 2022 left thousands of frustrated \u2018Swifties\u2019 without a chance to see their favorite artist in concert. And it also highlighted the trouble that arises when companies like Ticketmaster gain\u00a0monopolistic control.
\nIn any industry, market consolidation limits competition, choice and access to goods and services, all of which drive up prices.
\nBut there\u2019s another\u2014often overlooked\u2014consequence.
\nMarket leaders that grow too powerful become complacent. And, when that happens, innovation dies. Healthcare offers a prime example.
\nDe facto monopolies abound in almost every healthcare sector: Hospitals and health systems, drug and device manufacturers, and doctors backed by private equity. The result is that U.S. healthcare has become a\u00a0conglomerate of monopolies.
\nFor two decades, this intense concentration of power has inflicted harm on patients, communities and the health of the nation. For most of the 21st century, medical costs have risen faster than overall inflation, America\u2019s life expectancy (and overall health) has stagnated, and the pace of innovation has slowed to a crawl.
\nThis article, the first in a series about the ominous and omnipresent\u00a0monopolies of healthcare, focuses on how merged hospitals and powerful health systems have raised the price, lowered the quality and decreased the convenience of American medicine.
\nFuture articles will look at drug companies who wield unfettered pricing power, coalitions of specialist physicians who gain monopolistic leverage, and the payers (businesses, insurers and the government) who tolerate market consolidation. The series will conclude with a look at who stands the best chance of shattering this conglomerate of monopolies and bringing innovation back to healthcare.
\nHow hospitals consolidate power
\nThe hospital industry is now home to a pair of seemingly contradictory trends. On one hand, economic losses in recent years have resulted in record rates of\u00a0hospital (and hospital service) closures. On the other hand, the overall market size, value and revenue of U.S.\u00a0hospitals are growing.
\nThis is no incongruity. It\u2019s what happens when hospitals and health systems merge and eliminate competition in communities.
\nToday, the 40 largest health systems\u00a0own 2,073 hospitals, roughly one-third of all emergency and acute-care facilities in the United States. The top 10 health systems own a sixth of all hospitals and combine for\u00a0$226.7 billion\u00a0in net patient revenues.
\nThough the\u00a0Federal Trade Commission\u00a0and the\u00a0Antitrust Division of the DOJ\u00a0are charged with enforcing antitrust laws in healthcare markets and preventing anticompetitive conduct, legal loopholes and intense lobbying continue to spur hospital consolidation. Rarely are hospital M&A requests denied or even challenged.
\nThe ills of hospital consolidation
\nThe rapid and recent increase in hospital consolidation has left hundreds of communities with only one option for inpatient care.
\nBut the lack of choice is only one of the downsides.
\nHospital administrators know that state and federal statutes require insurers and self-funded businesses to provide hospital care within 15 miles of (or 30 minutes from) a member\u2019s home or work. And they understand that insurers must accept their pricing demands if they want to sell policies in these consolidated markets. As a result, studies confirm that hospital prices and profits are higher in uncompetitive geographies.<\/p>\n