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This paper examines if hospitals use consolidation to increase their market power and charge higher prices. Several different types of consolidation are examined at the aggregate hospital level as well as at two alternative service category levels - major diagnostic category (MDC) and diagnostic related group (DRG). Hospital-level analysis finds no evidence that consolidating hospitals charge more after merger than non-consolidating hospitals. Micro-level analyses indicate that hospitals that are part of a system that acquire other hospitals charge less than other hospitals after consolidation. Similar trend is found from mergers of independent hospitals within the same market area. MDC-level also indicates price of care goes up in a system hospital after it has been taken over by another system.
The health care industry continues to undergo unprecedented consolidation. Health care providers and payors alike have pursued a wide variety of integrative strategies to achieve efficiencies or other business advantages. The Health Care Mergers and Acquisitions Handbook is designed to educate the practitioner about the antitrust analysis of mergers and acquisitions within the health care industry. Over the past two decades there has been an extraordinary amount of litigation related to challenges of hospital mergers. Each chapter identifies and analyzes important antitrust issues governing such consolidations. Accordingly, the first several chapters are devoted to a detailed treatment of substantive issues peculiar to such mergers: an introduction to hospital merger litigation, describing trends in litigation and the way in which such mergers are analyzed; issues unique to market definition, including product market definition and geographic market definition; the competitive effects of hospital mergers, assessing the evidence necessary to establish a prima facie case in a merger challenge and the rebuttal arguments offered by merging parties; a unique rebuttal argument offered by merging hospitals that is treated separately due to its prominent role in hospital merger litigation - the role and significance of efficiencies in determining the competitive merits of such mergers; the potential applicability of the state action doctrine to hospital mergers. In addition to a substantive treatment of hospital mergers, the Handbook also addresses; combinations of health care management organizations (HMOs) and physician practice groups; the analysis used by the enforcement agencies when reviewing mergers of HMOs; antitrust issues posed by physician practice consolidations. The appendix contains a chart summarizing litigated hospital mergers.--
Seminar paper from the year 2011 in the subject Medicine - Hospital Environment, Clinical Medicine, grade: 1,7, Fresenius University of Applied Sciences Köln, language: English, abstract: Increasing cost pressure, shortage of staff, investment backlog – more and more hospitals need to merge with others to survive. Apart from the decreasing capital investments of the federal states, especially the implementation of DRGs (Monopolkommission 2008, 313) and the possibility of integrated health care lead to an enormous cost pressure. In Germany, there is a dual hospital funding. The costs of operation are beared by payments of health insurance funds. Investment costs for new buildings or the replacement of capital goods are payed by the federal states. However, these allowances of investment are on the decrease for years, which leads to investment backlogs in hospital (Augurzky et al. 2009, 93). This implies that hospitals are supposed to invest, but their funds are too small to do so. In the long run, the economic efficiency suffers because it cannot compete with other hospitals regarding the technological progress (Augurzky et al. 2009, 13). The introduction of DRGs [Diagnosis Related Groups], the basis of calculation for hospitals, lead to an increasing pressure of working economically. In the old system, every day of a patient’s stay in the hospital was refunded based on same-day hospital and nursing charges. In the new system, only occupant days within a predetermined period of hospitalization. The preterm discharge or a discharge exceeding the period of hospitalization results in discounts in payments, which often do not allow cost recovery (Eveslage 2006, 37-39). Accordingly, hospitals are under pressure to treat their patients fast and discharge them within the preset period. This requires efficient and economical operations. An additional burden is the growing competition in the sector of ambulatory care. As a result of the strong medical progress, more and more operations, which were formerly bound to be performed in hospital, can nowadays be done ambulant. Another innovation in the German health care system are medical service centers [Medizinische Versorgungszentren]. They will soon be capable to take over the primary health care in rural areas and replace major hospitals there, because they are able to work more economic (Augurzky et al. 2009, 162). On the whole, the pressure on hospitals increased steadily in the past years. Many hospitals are not capable to assert themselves on the market under today’s conditions solitary. 12 per cent of the economically weak hospitals are expected to shut down by 2020. (Augurzky et al. 2009, 124).
The health care industry is being transformed. Large firms are merging and acquiring other firms. Alliances and contractual relations between players in this market are shifting rapidly. Within the next few years, many markets are predicted to be dominated by a few large firms. Antitrust enforcement authorities like the Department of Justice and the Federal Trade Commission, as well as courts and legislators at both the federal and state levels, are struggling with the implications of these changes for the nature and consequences of competition in health care markets. In this paper, we summarize the nature of the changes in the structure of the health care industry. We will focus on the markets for health insurance, hospital services, and physician services. We will discuss the potential implications of the restructuring of the health care industry for competition, efficiency, and public policy. As will become apparent, this area offers a number of intriguing questions for inquisitive researchers.
In this provocative book, a renowned medical business reporter and a financial expert from Price Waterhouse offer a clear and objective understanding of the driving forces behind the turmoil caused by the rapid consolidation of health care organizations. Health care executives, policymakers, researchers, and consultants will gain the insider's knowledge they need to participate in a system where more key players will be investor-owned.
A New York Times bestseller/Washington Post Notable Book of 2017/NPR Best Books of 2017/Wall Street Journal Best Books of 2017 "This book will serve as the definitive guide to the past and future of health care in America.”—Siddhartha Mukherjee, Pulitzer Prize-winning author of The Emperor of All Maladies and The Gene At a moment of drastic political upheaval, An American Sickness is a shocking investigation into our dysfunctional healthcare system - and offers practical solutions to its myriad problems. In these troubled times, perhaps no institution has unraveled more quickly and more completely than American medicine. In only a few decades, the medical system has been overrun by organizations seeking to exploit for profit the trust that vulnerable and sick Americans place in their healthcare. Our politicians have proven themselves either unwilling or incapable of reining in the increasingly outrageous costs faced by patients, and market-based solutions only seem to funnel larger and larger sums of our money into the hands of corporations. Impossibly high insurance premiums and inexplicably large bills have become facts of life; fatalism has set in. Very quickly Americans have been made to accept paying more for less. How did things get so bad so fast? Breaking down this monolithic business into the individual industries—the hospitals, doctors, insurance companies, and drug manufacturers—that together constitute our healthcare system, Rosenthal exposes the recent evolution of American medicine as never before. How did healthcare, the caring endeavor, become healthcare, the highly profitable industry? Hospital systems, which are managed by business executives, behave like predatory lenders, hounding patients and seizing their homes. Research charities are in bed with big pharmaceutical companies, which surreptitiously profit from the donations made by working people. Patients receive bills in code, from entrepreneurial doctors they never even saw. The system is in tatters, but we can fight back. Dr. Elisabeth Rosenthal doesn't just explain the symptoms, she diagnoses and treats the disease itself. In clear and practical terms, she spells out exactly how to decode medical doublespeak, avoid the pitfalls of the pharmaceuticals racket, and get the care you and your family deserve. She takes you inside the doctor-patient relationship and to hospital C-suites, explaining step-by-step the workings of a system badly lacking transparency. This is about what we can do, as individual patients, both to navigate the maze that is American healthcare and also to demand far-reaching reform. An American Sickness is the frontline defense against a healthcare system that no longer has our well-being at heart.