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Market Concentration Drives Higher Health Care Costs

Wednesday, June 12, 2013   (0 Comments)
Posted by: Prucia Buscell
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Health Care's Overlooked Cost Factor

New York Times economic columnist EduardoPorter writes that lack of competition is the elephant in the room that's been overlooked in analysis of burgeoning health care costs.  He writes that two decades ago, four rival hospital systems of roughly equal  size competed for customers in each metropolitan area. By 2006, that number was down to three, and the decline continues—with more than 1,000 hopsital system mergers counted since the mid 1990s. Porter says prices rise with market concentration, and he cites a study by a Northwestern  University researcher who found hospitals raise prices about 40 percent after the merger of nearby rivals.  Further, he says that in 2002 three on four physicians practices were owned by doctors, an by 2008 more than half were owned by hospitals.

Porter also refers to a Robert Wood Johnson Foundation report indicating market concentration drives prices up and pushed quality and innovation down.  Read Porter's column here.


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