There is no credible evidence of recent widely publicized links between health systems' price increases and their market power, according to AHA-funded research examining two 2010 studies purporting to find such links.
Two economists at Compass Lexecon examined a Health Affairs article about California healthcare providers and a 2010 report by the Massachusetts attorney general examining hospitals and health systems in the state.
"We hope our report will be viewed as a useful message to the antitrust agencies that claims of 'provider market power' should be examined carefully for sufficient foundation or merit and should not stall efforts to lower barriers to clinical integration and organizational change," the author stated.
Regarding the Health Affairs article, Compass Lexecon found: "The results are presented largely as anecdotes recounting differences in prices for services at specific hospitals and as summaries of other articles observing that some hospitals have prices that are above 'average.' "
The article, it added, "uses the term 'market power' loosely to encompass a wide variety of conditions and circumstances, including many that are not traditionally treated as anticompetitive" and it "confuses consumer preference for providers, highly differentiated services or specialized services with market power."
Turning to the attorney general's report, Compass Lexecon said: "The data and reasoning of the AG report do not support its conclusion that price differences are caused by market power or leverage." For example, the report's measure of "leverage" is "flawed and does not represent a measure of market power or anticompetitive power over price."
Compass Lexecon added: "The report fails to take into consideration that size (whether measured by revenues or numbers of patients served) is related to other factors such as CMI and teaching intensity, which individually and collectively are related to costs and payments."
Read the Compass Lexecon report on market power.
Read more coverage on market power:
- ACO Panel to Discuss Competition Issues in Washington, D.C.
- Changes in Antitrust Guidelines Open 11 Markets to Mergers and Acquisitions
- Does Hospital Consolidation Lead to Higher Prices?
Two economists at Compass Lexecon examined a Health Affairs article about California healthcare providers and a 2010 report by the Massachusetts attorney general examining hospitals and health systems in the state.
"We hope our report will be viewed as a useful message to the antitrust agencies that claims of 'provider market power' should be examined carefully for sufficient foundation or merit and should not stall efforts to lower barriers to clinical integration and organizational change," the author stated.
Regarding the Health Affairs article, Compass Lexecon found: "The results are presented largely as anecdotes recounting differences in prices for services at specific hospitals and as summaries of other articles observing that some hospitals have prices that are above 'average.' "
The article, it added, "uses the term 'market power' loosely to encompass a wide variety of conditions and circumstances, including many that are not traditionally treated as anticompetitive" and it "confuses consumer preference for providers, highly differentiated services or specialized services with market power."
Turning to the attorney general's report, Compass Lexecon said: "The data and reasoning of the AG report do not support its conclusion that price differences are caused by market power or leverage." For example, the report's measure of "leverage" is "flawed and does not represent a measure of market power or anticompetitive power over price."
Compass Lexecon added: "The report fails to take into consideration that size (whether measured by revenues or numbers of patients served) is related to other factors such as CMI and teaching intensity, which individually and collectively are related to costs and payments."
Read the Compass Lexecon report on market power.
Read more coverage on market power:
- ACO Panel to Discuss Competition Issues in Washington, D.C.
- Changes in Antitrust Guidelines Open 11 Markets to Mergers and Acquisitions
- Does Hospital Consolidation Lead to Higher Prices?