Mergers allow hospitals to charge more: study

Mergers allow hospitals to charge more: study

A new study conducted by a team of researchers from the University of Southern California has warned policymakers that hospital mergers not only drive up prices but also allow even nonaffiliated hospitals to charge heftier fees from patients.

The researchers found that the domination of California’s hospital segment by two big health systems, viz. Sutter Health and Dignity Health, led to increase in prices in all of their facilities as well as allowed nonaffiliated facilities to charge more.

Warning authorities of hospital merger, the study stated, “Hospital prices ... increased substantially in California during a period of low overall price inflation, low economic growth, and declining demand. What happened in California is now happening across the country.”

Sutter and Dignity are two of the Golden State’s biggest healthcare systems. While Dignity controls 26 hospitals along with some other medical facilities in the state, Sutter controls 24 hospitals and some other facilities in Northern California.

Both Sutter and Dignity claims to be nonprofit organizations but Sutter surprisingly reported $81 million in net income last year, and Dignity reported net income of $558 million for the year ended June 30, 2015.

The findings of the study of the study were detailed in the most recent edition of the Journal of Health Care Organization, Provision & Financing.