Washington turned its attention to ever-increasing consolidation in the U.S. healthcare system this week as a broad bipartisan consensus seems to be emerging that it should be curtailed.
Exactly how was a lot less clear, but some general notions emerged both in hearings on Capitol Hill and in think tank policy sessions off it. Those included reining in large health insurance companies, big health systems and private equity investors, overhauling Medicare reimbursement, and supporting physician practices.
Related: Why some conservatives are targeting healthcare consolidation
“We've got to look at the size and scope of these companies. The extent to which there's been massive consolidation is not good for consumers. It's not good for patients. It's not good for doctors,” Rep. Chip Roy (R-Texas) said in an interview following a hearing on healthcare consolidation Thursday. “We need to change policies to minimize the amount of consolidation so we can have greater competition.”
Roy spoke after a House Budget Committee session entitled, “Breaking Up Health Care Monopolies: Examining the Budgetary Effects of Health Care Consolidation," where the Congressional Budget Office’s director of health analysis, Chapin White, delivered a stark assessment of the current state of play.
More than two-thirds of hospitals were affiliated with a health system in 2022, and the share of physicians employed by hospitals and health systems increased from 29% in 2012 to 41% in 2022, White said. Those rates are expected to grow, he said.
Sophia Tripoli, senior director of policy for Families USA, testified to the Budget Committee about the massive market shares that health insurers such as UnitedHealth Group subsidiary UnitedHealthcare, CVS Health subsidiary Aetna, and Blue Cross and Blue Shield carriers including Elevance Health hold in some markets, and about the national dominance of UnitedHealth Group unit OptumRx, Cigna division Express Scripts and CVS Health subsidiary CVS Caremark in the pharmacy benefit manager sector.
The majority-Republican House held another hearing about healthcare consolidation Thursday, when the Ways and Means Committee's health subcommittee convened for a session dubbed, “The Collapse of Private Practice: Examining the Challenges Facing Independent Medicine.”
“Compared to three decades ago, there are 30% fewer physicians in private practice,” said Rep. Vern Buchanan (R-Fla.), who chairs the subcommittee. "A thriving healthcare ecosystem should include a healthy balance of large health systems and local mom-and-pop practices.”
Lawmakers and witnesses didn't settle on much in the way of concrete solutions to the problems they described, but appeared to agree that Congress should seek to protect smaller healthcare providers, especially doctors. Boosting Medicare physician pay topped the list.
“Medicare reimbursement payment updates do not come close to matching the rising practice costs. More recently, physicians have taken payment cuts,” Dr. Timothy Richardson of Wichita Urology in Kansas, told the Ways and Means panel. “That is simply not sustainable.”
Richardson and others also said hospitals are paid more to provide the same services as doctors, which motivates them to buy up physician practices.
“It's not hard to understand why hospitals have focused on acquiring physician practices because that strategy simultaneously quashes competition in the local market and captures downstream revenue,” Richardson said.
Richardson advocated for so-called site-neutral payment policy, under which Medicare would pay based on the service, not where it's provided. The House passed legislation in December to adopt site-neutral Medicare reimbursements but the measure did not survive negotiations with the Senate.
Dr. Jennifer Golson, a family physician from Summit, Mississippi, who recently gave up her practice, said the payment discrepancy made it more difficult for her to recruit and retain employees because nearby hospitals had more money to spend.
“One of the biggest barriers I believe I had was that the local hospital considered me as competition instead of a community partner, and so they continued to expand around me,” Golson said.
"Whether or not to sell a practice should be a choice by the physician based on what works best for them, their practice and their patients,” Buchanan said. “They should not be forced into practice consolidation.”
Easing private and public sector bureaucracy was another focus, with lawmakers and witnesses taking aim at prior authorizations and Medicare’s maligned Merit-based Incentive Payment System.
On the broader front, lawmakers and witnesses suggested the Federal Trade Commission and the Justice Department may have take more aggressive actions, including breaking up large companies.
“I don't know what that looks like in terms of antitrust,” Roy said. “I don't know what that looks like in terms of maybe changing some of our restrictions and policies and tax policies. But we need to change policies to minimize the amount of consolidation.”
White testified that whatever Congress and federal agencies may do likely won't have much effect on healthcare merger and acquisition trends. Even if Congress were to enact sweeping legislation to curb consolidation, he said, the best lawmakers could hope for is a one-quarter reduction in deals and a less than 1% decrease in the federal budget deficit, or about $4.8 billion in 2032. CBO did not provide more specific projections in the absence of specific legislation to evaluate.
Budget Committee Chair Jodey Arrington (R-Texas) noted earlier CBO estimates found implementing a site-neutral policy would save Medicare about $150 billion over 10 years. The hospital sector vehemently opposes this policy.
Many lawmakers also pointed to the House-passed Lower Costs More Transparency Act of 2023, which would impose new transparency requirements on PBMs. among many other provisions.
On Tuesday, Health and Human Services Department Chief Competition Officer Stacy Sanders pleaded for the public's help during an event hosted by the Georgetown University Center on Health Insurance Reforms. HHS has issued requests for information on PBM and drug pricing and on data transparency, and joined with the Justice Department and the FTC in an inquiry on the effects of healthcare consolidation.
“Research shows that competition in healthcare markets promotes higher quality, lower-cost healthcare, greater access to care, increased innovation and higher wages and better benefits for healthcare workers,” Sanders said.
Sanders made the same pitch later Tuesday at the left-leaning American Economic Liberties Project’s Anti-Monopoly Summit, where Sen. Elizabeth Warren (D-Mass.) pointed to UnitedHealth Group and the recent financial woes at Dallas-based Steward Health Care as evidence that the federal government is falling short, despite some efforts to halt proposed deals.
“There is so much more we need to do,” Warren said. “Stopping mergers is a first step in starting to turn the ship around so that instead of going in the pro-corporate direction, where they just got to get bigger and bigger and take more and have more power.”
Warren sounding like Roy, a very conservative lawmaker, offered a hint of a growing bipartisan sense that healthcare companies have simply gotten too large.
Charles Miller, a health policy analyst at the think tank Texas 2036, told the Georgetown University audience that the reason going after healthcare consolidation is not necessarily partisan, and why it will be hard anyway, is because it really is about money.
“We're trying to take money away from an industry that makes a lot of it, and people don't like having money taken away from them,” Miller said. “That is honestly the biggest obstacle. It's not conservative or liberal ideology. It is the fact that we have an industry that is making a lot of money and we're trying to lower the prices that people are paying for it.”
