Cross-Market Hospital Systems Flex Negotiating Power, to Payers’ Detriment

The rise in consolidation among hospital systems operating in different geographic areas may be hampering the competitive strength of health insurers by limiting their negotiating muscle, a new study in Health Affairs says. 

The pricing effects of hospital consolidation is not new. Previous research, including a 2020 report from the Medicare Payment Advisory Commission (MedPAC), shows that merging hospital systems tend to lead to higher prices. 

However, the new study seeks to unravel the effects of a particular phenomenon — what happens after a merger or acquisition (M&A) among hospitals that operate in different markets and the impact on downstream factors, including contract negotiations with insurers.