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U.S. House Committee Hears Academic Perspectives on Health Care Market Dynamics

February 14, 2018

In a hearing before the U.S. House Energy & Commerce Oversight & Investigations Subcommittee, federal lawmakers heard testimony from academic scholars about the forces that result in consolidation within the health care market and the impact of those market dynamics.

The hearing—Examining the Impact of Health Care Consolidation—presented an academic perspective, outlining economic factors that may underlie trends within the health care sector. The subcommittee was seeking insight about hospital consolidation, vertical hospital-physician integration, insurance market consolidation, and the role of the Federal Trade Commission and Department of Justice in addressing antitrust challenges.

In a letter to the subcommittee and blog post, the American Hospital Association (AHA) urged lawmakers to appreciate how rapidly the health care environment is changing and consider the challenging realities of delivering care when considering public policy approaches.

The AHA cited a recently issued report—Hospital Merger Benefits: Views from Hospital Leaders and Econometric Analysis—which indicates that hospital mergers are laying the foundation for value-based care by:

  • Leveraging the benefits of scale to reduce the costs of capital and clinical standardization
  • Improving quality resulting from standardizing clinical protocols and investments to upgrade facilities and services
  • Providing more comprehensive and efficient care

An analysis by Deloitte also reflects on ways market realignments can increase value. The study demonstrates that well-planned alignments allow for cost efficiencies from economies of scale, and the ability to make investments in technology, quality improvements, and services.

The AHA also highlighted that hospital prices have increased at a slower rate of growth, as compared to insurance premiums and prescription drug prices that have been rising at faster levels.

Lawmakers expressed a particular interest in understanding how public policy may be impacting the relationships between physicians and hospitals, but acknowledged an appreciation for the fact that market alignments have been instrumental in many circumstances in preserving access to essential services.

Pennsylvania hospitals pursue a diversity of approaches to best serve their communities—partnerships, integration, specialization, and redefinition. Additionally, hospitals are engaged in new relationships with physicians, health plans, and the full continuum of care. Ultimately, no two communities, within Pennsylvania or across the country, are alike. Hospitals are at the center of rapidly evolving health care markets. Realignments must be viewed in the context of the community being served.

Please contact Laura Stevens Kent, HAP’s vice president, federal advocacy, with questions concerning federal policy work.

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