Decades of hospital and health system consolidation across the United States have created large regional and national health systems with the market power to raise prices. This consolidation trend has also included the downsizing or closing of hundreds of community hospitals, especially in low-income rural and urban areas, while health systems have been shifting facilities into middle-income suburban neighborhoods with large concentrations of commercially-insured residents. The people most affected by these trends have been those who are medically underserved, and the real-life consequences for individuals, families and communities amount to a national health equity crisis.

That’s what prompted Community Catalyst to submit comments to the U.S. Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) on April 20, in response to their Request for Information on how they should revise the guidelines anti-trust regulators use when reviewing proposed hospital mergers and acquisitions. We urged the FTC and DOJ to consider the potential impact of such transactions on health equity.

What are some of the health equity concerns federal anti-trust regulators should consider?

Our recommendations aim to address the impacts of rampant hospital consolidation on both the price of health care and access to care, especially in medically-underserved geographic regions:

  • When hospitals merge, prices go up. There is a well-documented trend of hospital consolidation leading to increases in the price of health care, despite pre-merger promises of greater efficiency and lower costs. The results are higher premiums and deductibles for people with health insurance, and burdensome costs for those who lack insurance. We noted that employees of small businesses already have higher-than-average premiums and deductibles, and in some states, those employees are disproportionately Black, Latinx and other people of color. In states where Medicaid enrollees are subject to cost sharing, higher hospital prices could increase that burden.
  • Medical debt increases, as do aggressive billing practices. People who are uninsured or under-insured face impossible choices of avoiding expensive, but needed, medical care or facing financial ruin and even medical bankruptcy. Making matters worse, health systems may introduce aggressive billing and collection practices at hospitals they acquire.
  • Urban and rural communities of color lose their hospitals. In a market-driven health system, hospitals are expanding in middle-income and affluent areas with many commercially-insured residents. Left behind are urban and rural communities, especially communities of color, with many uninsured or publicly-insured residents, where hospitals are closing or downsizing. The COVID-19 pandemic starkly revealed the ways in which mal-distribution of hospital beds left these communities with dangerously overburdened safety-net hospitals.
  • Continuity of care is interrupted when hospitals close obstetric services, ERs and ICUs. Hospital systems often acquire local hospitals and then downsize them, forcing patients to travel to “hub” hospitals for key services. The impact has been particularly acute for pregnant people, who are forced to travel long distances to other hospitals when local obstetric services are shuttered. More than half of rural counties now have no obstetric service, and counties with Black women of reproductive age who have low incomes are more likely to lose local labor and delivery units.
  • Communities lose local control of their hospitals. When large health systems or private equity firms take over local hospitals, decision-making shifts to out-of-town executives. Health system priorities, practices and policies override community priorities. We noted that some health systems impose non-medical restrictions on access to care, causing a loss of key reproductive, obstetric, LGBTQ+-inclusive and end-of-life options. Private equity firms have loaded up hospitals with debt and stripped them of staff and key services.

What should federal regulators do to better assess the likelihood that a proposed merger or acquisition will produce one of these harmful results?

Community Catalyst urged the FTC and DOJ to more directly and actively engage affected communities by inviting comment from residents and community-based organizations, instead of relying on testimony from representatives of health insurance companies. We also called on these regulators to introduce a health equity assessment into the guidelines they use to review proposed mergers and acquisitions. We noted the recent announcement by CMS that it is proposing three health-equity-focused measures for introduction into the Hospital Inpatient Quality Reporting (IQR) program, and suggested that access to those metrics could help inform a health equity assessment of a transaction.

We offered the models of health equity assessments recently enacted in New York and Oregon. They take different forms, but generally New York and Oregon laws strengthen state oversight of proposed health facility transactions (such as mergers/acquisitions, downsizing, transfers of beds from one facility to another) by assessing how the change would affect access to health care services for medically-underserved people.

The New York model amends the existing Certificate of Need program to require an independent assessment of the likely impact of a transaction on medically-underserved people, including Black, Latinx, Indigenous, Asian and other people of color, immigrants, women, LGBTQ+ people, people with disabilities, older people, residents of rural areas and uninsured or publicly-insured people. Factors to be evaluated include whether access to care would be improved and health disparities reduced, the amount of indigent care that would be provided, whether there would be access through public transportation and how there will be communication with people whose first language is not English and those with speech, hearing or visual impairments.

The Oregon model applies to large-scale transactions and assesses the likely impact on the cost and quality of health care, as well as access to care and health equity. Recently adopted implementing regulations target those transactions that would significantly increase travel time, such as to alternative providers, decrease the availability of culturally competent providers, interpreters or clinicians taking new patients or decrease access to a list of essential services.