Study finds no systematic quantifiable relationship between price and concentration

Claims about hospital merger effects often rely on outdated data that do not reflect today’s dynamic market conditions, according to a new study. “Economic models used in merger assessment that do not account well for market realities, current dynamics and the overall effects of mergers, lack robustness and tend to mis-predict the competitive effects of mergers,” say authors Bruce Vladeck, senior advisor to health care consulting firm Nexera and former administrator of the Health Care Financing Administration (now the Centers for Medicare & Medicaid Services); Margaret Guerin-Calvert, president of FTI Consulting’s Center for Healthcare Economics and Policy; and Jen Maki, the center’s senior director. According to the study, “concentration or structure alone is not a meaningful or reliable predictor of price changes” and there are many other more important drivers. The study used a current commercial claims database covering 360 metropolitan areas. The report recommends that antitrust agencies update their guidance on hospital mergers to avoid hindering efforts to “transform the health care system in an effort to deliver better quality care at a lower price.”