August 31, 2018
One of the biggest inflators of medical costs in 2019 will be hospital megamergers, a new analysis by PwC’s Health Research Institute suggests.
For its report, researchers at HRI analyzed census data from the Herfindahl-Hirschman Index for hospital markets to predict and understand hospital consolidation patterns.
Here are five things to know:
1. The HRI estimates that 93 percent of most metropolitan hospital markets will be highly concentrated by 2019.
2. This trend, in the short term, will likely lead to higher prices for medical services in these markets.
3. The reasons for the inflated costs are that providers will have more leverage to negotiate higher prices for medical services with payers and there will be increased expenses from integrating various networks.
4. “There has been little to no action taken to stop providers from concentrating or taking price increases,” Sherry Glied, PhD, dean of New York University Wagner Graduate School of Public Service, told HCI. “If inflation ramps up, and consolidation continues, expect to see strong upward pressure on prices.”
5. Over the long term, economies of scale and efficiencies may be achieved to lower costs, HCI said.