What regulators are doing about rapid healthcare consolidation

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Consolidation of physicians in hospitals and health systems as opposed to private practices has regulators in Washington and across several state capitals concerned, The Columbus Dispatch reported Oct. 14.

An American Medical Association study released in May showed that for the first time, less than 50 percent of physicians work in private practice. The ongoing shift toward larger practice size is also accelerating, with the largest two-year increase of physicians at practices with over 50 people occurring between 2018 and 2020. 

This wasn't always the case. Anita Somani, MD, of Columbus-based OhioHealth told the Dispatch in a podcast how the field has changed: "Most of the physicians we worked with were in private practice. Nobody had a hospital-based practice." When she finished her residency, she explained that contacts in a hospital helped her set up her own private practice. Now, though, physicians seeking flexibility and bigger teams are leaving small practices for hospitals. Having to deal with the business side of running a private practice, including balancing books and managing employees, can also make physicians wary. 

The move away from smaller practices toward larger health systems can be worrying from an antitrust perspective. Kaiser Family Foundation research has shown that consolidation tends to raise prices of care without necessarily improving quality. As such, regulators are looking into the trend.

In July 2021, President Joe Biden signed an executive order promoting competition in markets, including in the healthcare sector. The order mentions that unchecked mergers have created consolidated hospitals and health systems, and that the top 10 health systems now control a quarter of the market. 

The Federal Trade Commission has also been enforcing antitrust laws in the healthcare industry to prevent anticompetitive behavior. A statement on the FTC website reads, "When health care markets are competitive, consumers benefit from lower costs, better care and more innovation." The agency recently launched an investigation into private practice and hospital mergers, ordering patient-level commercial claim information from six insurance companies including Aetna, Anthem and UnitedHealthcare. 

HHS Secretary Xavier Becerra also said to the Senate health committee that he would continue to push against anti-competitive providers and practices. 

Thus, regulators are continuing to add to their arsenal to combat unchecked consolidation and encourage competitive markets that provide lower prices and better care.

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