Integrated care's drawback: It could lead to health monopolies

Oct 26 2009

President Barack Obama and Democratic leaders have repeatedly praised integrated health care for its ability to improve safety and quality while reducing costs, citing examples such as the Mayo Clinic. But health economists worry that such consolidation may actually increase costs and could lead to monopolies.

The Boston Globe reports: "The health care overhaul proposals before Congress encourage hospitals and doctors to join forces and create networks that would do a better job of coordinating patient care. But large provider groups also carry a risk: They can use their market strength to raise prices and reap higher profits."

In the article, the Globe looks at this example: "Partners HealthCare, which includes Massachusetts General Hospital and Brigham and Women's Hospital as well as a 4,000-physician network of community affiliates, has been accused of using its enormous clout to dictate prices and marginalize competitors. A 2006 Robert Wood Johnson Foundation study found that a wave of hospital mergers in the 1990s led to price increases of 5 to 40 percent, and warned an impending second wave could leave many cities with a monopoly hospital system. Robert Town, a health economist at the University of Minnesota who co-authored the study, said once a provider group becomes indispensable in a community, it can force insurers to pay more -- as many have already done" (Wangsness, 10/25).