Consolidating California: Concentrated Provider Markets and Rising Prices
A UC Berkeley study suggests that provider and insurer consolidation is increasing, reducing competition in regional markets, and leading to higher healthcare prices across California.
In the midst of a nationwide consolidation trend, California is witnessing a swell of mergers among health providers and insurers, resulting in higher prices for consumers and large-scale employers across the state.
A recent study found most counties in California, especially those in the rural northern portion of the state, have highly concentrated hospital markets, noting provider consolidation rose as average insurer consolidation decreased statewide.
The report, released last month by the Nicholas C. Petris Center on Health Care Markets and Consumer Welfare School of Public Health at the University of California, Berkeley, concluded that Californians pay for healthcare services that are “considerably above what a more competitive market would produce.”
Of the 54 counties surveyed, 44 were highly concentrated hospital markets and six were moderately concentrated. According to the study, seven of these counties warrant “concern and scrutiny” by the Department of Justice and the Federal Trade Commission.
The report found from 2010 to 2016, there was a 15% increase in physicians working for a foundation owned by a hospital or health system rather than physician practices, due in part to health system mergers, as well as a 13% increase for primary care physicians, and a 29% increase for specialist physicians.
Additionally, the study found 42 counties surveyed for commercial health plans were highly concentrated while 16 were moderately concentrated. The study also recommended federal agencies review the concentration levels of the insurer market in seven counties.