More consolidation across the healthcare sector is on the horizon thanks in part to the COVID-19 pandemic, according to an opinion by Commonwealth Fund leaders published in Harvard Business Review.
The consolidation trend has been ongoing for the last 20 years, but the pandemic may be adding fuel to fire, wrote Lovissa Gustafsson, assistant vice president at the Commonwealth Fund, and David Blumenthal, president of the organization. And the acceleration of the market consolidation should be concerning, as consolidation often leads to higher prices and a failure to improve quality of care.
While the Federal Trade Commission has attempted some oversight, recently issuing orders to six of the biggest insurers in the U.S. for claims information, antitrust enforcement isn’t necessarily to follow. Further, smaller transactions that still change the competition landscape, such as physician practices being gobbled up, aren’t being closely scrutinized. The agency also previously promised to deeply examine the issue of hospital consolidation in 2019.
“That’s because the majority of individual transactions are too small to require federal reporting even though the acquisition of several smaller provider organizations can collectively lead to significant market concentration that seriously weakens the level of competition,” the authors wrote.
Plus, studying the impact of these consolidations across healthcare providers and specialties is nearly impossible due lack of transparency and data. However, Congress and the FTC could subpoena more information to evaluate and mitigate the anti-competition effects of healthcare consolidation.
Gustafsson and Blumenthal listed a number of steps for the two entities to take, including:
- Evaluating the integrated payer and provider model
- Evaluating the effect of M&A across the pharmacy specialty, including pharmacy benefit managers, retail chains, administrative series and more on drug purchasing, distribution and pricing
- Restricting or prohibiting anti competitive contract provisions
- Requiring all M&A activities to be reported
- Expanding the FTC’s antitrust powers
“We know with near certainty that big systems and insurers will be going on a shopping spree for struggling providers after the pandemic subsides,” they wrote. “By taking action now, Congress and regulators can help prevent market distortions that could adversely affect the cost and quality of care.”