Andréa Caballero, Vice President of Policy at Catalyst for Payment Reform, calls Katie Gudiksen, Executive Editor at The Source on Healthcare Price and Competition, and Brent Fulton, Associate Research Professor of Health Economics at UC Berkeley and Associate Director of the Petris Center to dissect the evolving landscape of hospital consolidation. They explore horizontal, vertical, and, crucially, cross-market mergers, providing context on their prevalence and challenging conventional wisdom around market definitions. The discussion highlights how consolidation, irrespective of type, demonstrably increases prices without corresponding quality improvements – a critical concern for purchasers.
To read the research discussed, please click link here.
Key Highlights:
Economic Realities: Employers, Employees, and the Shifting Cost Burden:
Research demonstrates a direct pass-through of rising healthcare costs (driven by consolidation) to employer premiums and, subsequently, employee wages. Katie, Andréa, and Brent explore the less-obvious consequences, including potential FTE reductions disproportionately impacting lower-income workers. The discussion quantifies these impacts, including potential wage losses and decreased tax revenue, illustrating the macroeconomic consequences of unchecked consolidation.
Premium Growth, Wage Stagnation, and the Erosion of Price Sensitivity:
Recent KFF data reveals the alarming divergence between family premium growth (a fourfold increase since 2000, reaching $25,600 in 2024) and stagnant wage growth (doubling over the same period). This trend, coupled with government subsidies and limited transparency, diminishes employee price sensitivity, potentially undermining employer efforts to negotiate competitive rates.
The Subtle Harms of Cross-Market Mergers & Multi-Region Employers:
Brent explores the complex economic theories behind cross-market mergers and their potential impact on multi-region employers. The discussion highlights how national insurers and employers with a presence in seemingly distinct markets may unknowingly amplify the anti-competitive effects of consolidation, leading to higher costs and reduced leverage in negotiations.
Actionable Strategies for Data-Driven Purchasing & Policy Engagement:
Andréa Caballero concludes with practical recommendations tailored for sophisticated purchasers. Emphasizing the importance of granular market analysis, active engagement in policy advocacy, and strategic deployment of data-driven tools to optimize purchasing strategies and promote affordability.