As Hospital Chains Grow, So Do Their Prices For Care

As health care consolidation accelerates nationwide, a new study shows that hospital prices in two of California’s largest health systems were 25 percent higher than at other hospitals around the state. Researchers said this gap of nearly $4,000 per patient admission was not due to regional wage differences or hospitals treating sicker patients. Rather, they said California’s two biggest hospital chains, Dignity Health and Sutter Health, had used their market power to win higher rates.

“California experienced its wave of consolidation much earlier than the rest of the country and our findings may provide some insight into what may happen across the U.S. from hospital consolidation,” said the study’s lead author, Glenn Melnick, a health care economist at the University of Southern California. Dignity and Sutter disputed the idea that they can dictate rates, saying they face ample competition.

Hospital chains that buy up other facilities, clinics and physician offices often tout savings and improved services from coordinating patient care and eliminating inefficiencies. The researchers found no evidence that any potential savings were being passed along to the employers, insurers and patients who pay for the care. The study, published in the Journal of Health Care Organization, Provision and Financing, comes as Sutter faces a lawsuit and an investigation by state Attorney General Kamala Harris for potential harm to consumers...