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Addressing Consolidation in Health Care Markets

Educational Objective
To identify the key insights or developments described in this article
1 Credit CME

US business sectors ranging from manufacturing to digital networks have become increasingly concentrated, often yielding fewer choices, poorer service and quality, and higher prices. The business of health care is no exception. Researchers have shown that consolidation of health care entities and services is a key driver of higher prices1 and tends to reduce rather than increase patient satisfaction.2 Consolidation in the pharmaceutical industry stifles innovation3 and increases the vulnerability of the drug supply chain. However, merger announcements continue unabated. For example, in 2019, Optum became the largest employer of physicians following its acquisition of Davita Medical Group, and Catholic Health Initiatives and Dignity Health combined to form a 142-hospital system.

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Article Information

Corresponding Author: Leemore Dafny, PhD, Harvard Business School and John F. Kennedy School of Government, Harvard University, 15 Harvard Way, Morgan 481, Boston, MA 02163 (ldafny@hbs.edu).

Published Online: January 28, 2021. doi:10.1001/jama.2021.0038

Conflict of Interest Disclosures: Dr Dafny reported receiving personal fees from Bates White Economic Consulting, Cornerstone Research, Analysis Group, and Geisinger Health System and grants and fees from the Brookings Institute, the Arnold Foundation, the Center for Equitable Growth, and the Peterson Center on Healthcare and serving on the board of the Health Care Cost Institute from 2012 to 2020.

References
1.
Testimony of Leemore S. Dafny, PhD before the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations on “Health Care Industry Consolidation: What Is Happening, Why It Matters, and What Public Agencies Might Want to Do About It.” February 14, 2018. Accessed December 29, 2020. https://docs.house.gov/meetings/IF/IF02/20180214/106855/HHRG-115-IF02-Wstate-DafnyL-20180214.pdf
2.
Beaulieu  ND , Dafny  LS , Landon  BE , Dalton  JB , Kuye  I , McWilliams  JM .  Changes in quality of care after hospital mergers and acquisitions.   N Engl J Med. 2020;382(1):51-59. doi:10.1056/NEJMsa1901383 PubMedGoogle ScholarCrossref
3.
Cunningham  C , Ederer  F , Ma  S .  Killer acquisitions.   J Polit Econ. Published online April 19, 2020. doi:10.2139/ssrn.3241707Google Scholar
4.
Federal Trade Commission. Statements of antitrust enforcement policy in health care. Published August 1, 1996. Accessed January 23, 2021. https://www.ftc.gov/public-statements/1996/08/statements-antitrust-enforcement-policy-health-care
5.
Federal Trade Commission; Department of Justice. Hart-Scott-Rodino annual report, fiscal year 2019. Accessed December 29, 2020. https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-bureau-competition-department-justice-antitrust-division-hart-scott-rodino/p110014hsrannualreportfy2019.pdf
6.
Testimony of Bill Baer: Hearing on “proposals to strengthen antitrust laws and restore competition online” before the United States House of Representatives Committee on the Judiciary, Subcommittee on Antitrust, Commercial, and Administrative Law. October 1, 2020. Accessed December 29, 2020. https://docs.house.gov/meetings/JU/JU05/20201001/111072/HHRG-116-JU05-Wstate-BaerW-20201001.pdf
7.
Baer  W , Baker  JB , Kades  M ,  et al.  Restoring Competition in the United States: A Vision for Antitrust Enforcement for the Next Administration and Congress. Washington Center for Equitable Growth; November 2020.
8.
Attorney General Becerra: state, unions, employers, and workers reach settlement to address alleged anticompetitive practices by Sutter Health that increased healthcare costs for Californians. News release. California Attorney General’s Office. December 20, 2019. Accessed December 29, 2020. https://oag.ca.gov/news/press-releases/attorney-general-becerra-state-unions-employers-and-workers-reach-settlement
9.
Consolidation Prevention and Competition Promotion Act of 2019, S 307, 116th Cong, 1st sess (2019). Accessed December 29, 2020. https://www.congress.gov/116/bills/s307/BILLS-116s307is.pdf
10.
Klobuchar, Grassley introduce legislation to ensure antitrust authorities have the resources they need to protect consumers. News release. US Senator Amy Klobuchar. June 20, 2019. Accessed December 29, 2020. https://www.klobuchar.senate.gov/public/index.cfm/2019/6/klobuchar-grassley-introduce-legislation-to-ensure-antitrust-authorities-have-the-resources-they-need-to-protect-consumers
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