Health care markets have experienced substantial consolidation

Ryan Haygood, Health Care Policy Intern

Health care markets have experienced substantial consolidation in recent years as big firms swallow up their competitors in a race for greater market share. These trends have progressed in nearly every sector of the health care industry, from drug wholesalers to insurance companies, pharmacy benefit managers (PBMs), and even providers. Consolidation is also ramping up across these groups, with pharmacy giant CVS and insurer Aetna aiming to clear their $69 billion merger with a federal judge this week. The chart below shows how hospital consolidation has steadily increased in the last decade. Not only are we seeing more hospital mergers and acquisitions, but the typical size of these buyouts (measured in the seller’s revenue) is also growing at an average rate of 13.8 percent each year. Evidence shows that increased market power leads to increased prices for patients, despite the hope that consolidation would reduce costs and streamline delivery.

Data from Kaufman Hall’s 2017 and 2018 “M&A in Review” reports

https://www.americanactionforum.org/weekly-checkup/the-state-of-state-medicaid-expansion/#ixzz5qSsA8g4N
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