New Report: How Consolidation Fuels the Healthcare Affordability Crisis

According to a new report by the healthcare advocacy organization Families USA, America’s healthcare affordability crisis is driven by unchecked consolidation in healthcare.

The report comes after CEOs from HCA Healthcare, CommonSpirit Health, New York-Presbyterian, and ECU Health recently testified before the House Ways and Means Committee on pricing practices and inflated healthcare charges.

In the executive summary of the report Big Systems, Bigger Profits: Consumers Are Paying the Price of Corporate Hospital Power, Families USA states that a handful of corporate hospital systems in each state now control most of American hospital care.

Notably, the report found that large hospital systems used their market power to charge significantly more than the Medicare rate.

According to the report’s findings, individual hospitals owned by a health system generated nearly 10 times more in annual net income ($27.7 million) than independent hospitals not owned by a health system ($3.0 million). Rural independent hospitals generated the lowest average net income ($2.3 million). 

During a press call discussing the report, Anthony Wright, executive director of Families USA, said that large hospital chains can basically charge what they want. The question, he said, is: what will Congress do to confront these healthcare corporations and contain healthcare costs? Wright expressed feeling encouraged by the Ways and Means Committee’s hearing last week.

“One of the most striking parts of the report is that those independent hospitals make a fraction of those in big corporate hospital chains, and those are the ones that are disproportionately harmed by Congress as a result,” Wright highlighted.

Sophia Tripoli, senior director for Health Policy at Families USA, remarked that political will is needed to advance meaningful reforms that reduce costs and hold corporate health systems accountable. The report, she said, offers lawmakers on both sides of the aisle further data to confront hospital consolidation.

Ellen Allen, executive director of West Virginians for Affordable Healthcare, said that West Virginia spends about $6,000 per capita on hospital care, nearly $2,000 more than the national average. “We urge leaders in Congress to do more to take on big health systems that have way too much power over charging patients in West Virginia and across the country.”

Adam Fox, deputy director of the Colorado Consumer Health Initiative, said that Colorado hospitals regularly rank among the highest in the nation for their prices. “Hospital prices are a significant driver of increasing healthcare costs and the affordability crisis.” Fox added, “We started to set controls on rates in our Colorado option or public option plans, and we are requiring more transparency and reporting from hospitals regarding their finances, profits, and community benefits. But the reality is that more must be done, and our efforts in Colorado have been directly stymied by the massive lobbying of big hospital systems, fighting to preserve their excessive profits.”

In the report’s conclusion, Families USA writes that Congress has tools available, including increasing price transparency, strengthening oversight of consolidation, and curbing anticompetitive and abusive pricing practices to bring prices close to reasonable benchmarks.