News: Physicians face steep price hikes post-vertical acquisition, report suggests

A new report suggests that “vertical consolidation” arising from hospital acquisitions have resulted in “significant price increases for both physician and hospital services,” according to HealthLeaders.

The report, published by the National Bureau of Economic Research, examined the impact of hospital acquisitions on OB/GYN practices between 2008 and 2016. According to the authors of the report:

• Within the timeframe examined, the share of physician practices increased nationally by 71.5% from 27.5% in 2008 to 47.2% in 2016
• On average, two years post-acquisition, price increases for physician services and labor/delivery services increased by $502 (+15.1%) and $475 (+3.3%), respectively
• Physicians already integrated at a hospital faced 9% price increase post-acquiring additional physicians within their specialist

“While evaluating all of these acquisitions might be challenging under current processes,” the authors noted, “our estimates suggest the scale of consumer harm generated by these transactions in aggregate is similar in magnitude to that of horizontal hospital mergers, which have been of great interest to regulators.”

Editor’s note: To read the HealthLeaders article, click here. To read the NBER report, click here.