How $7.7B Baylor, Scott & White Deal Might Affect Healthcare Costs

In June, for example, the Robert Wood Johnson Foundation issued a review of previous studies on the effect of hospital consolidations and found that it "generally results in higher prices. This is true across geographic markets and different data sources. When hospitals merge in already concentrated markets, the price increase can be dramatic, often exceeding 20%."

On the other side of the ledger, the RWJF review also cited previous research indicating  that hospital competition improves quality.

But the projected effect on healthcare costs as a result of consolidation has garnered wide concern. Last month, America's Health Insurance Plans cited the costs borne by consumers as a factor in the amicus brief it filed in a federal appeals court supporting the Federal Trade Commission's challenge of a merger of two hospitals in Toledo, OH.

"Experience demonstrates that hospital consolidation results in higher prices for medical services and higher health care costs for consumers and employers," AHIP President/CEO Karen Ignagni, said in a media release accompanying the brief.

"Consumers have borne a tremendous cost from anticompetitive hospital mergers…  A hospital transaction that eliminates competition between significant competitors increases the ability of those formerly competing hospitals to demand and obtain higher prices. Those increased prices are ultimately paid by consumers, who also must bear the additional harm created by reduced incentives to improve quality."