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Health Policy
February 19, 2021

Overcoming the Market Dominance of Hospitals

Author Affiliations
  • 1Stanford University School of Medicine, Stanford, California
  • 2Center for Health Equity Research and Promotion, Corporal Michael J. Crescenz Veterans Affairs Medical Center, Philadelphia, Pennsylvania
  • 3Department of Medical Ethics and Health Policy, Perelman School of Medicine, University of Pennsylvania, Philadelphia
JAMA. 2021;325(10):929-930. doi:10.1001/jama.2021.0079

Amidst remarkable uncertainty for its future, one of the most concerning and constant trends in US health care has been the increasing consolidation of health delivery organizations. In health care, 2 main forms of consolidation exist. Horizontal consolidation occurs when hospitals or physician groups merge together, enabling the combined entity to increase its market share. For example, in 2015, Stanford Health Care merged with ValleyCare Health System, combining a 2-hospital 613-bed academic medical system with a 242-bed hospital. After hospitals merge, a market often becomes less competitive because of decreased hospital competition. Vertical consolidation occurs when a hospital increases its employed physicians by acquiring a physician practice. Between July 2016 and January 2018, hospitals acquired 8000 medical practices, and 14 000 physicians left private practice to become employed by hospitals.1 This process makes the physician market less competitive by reducing the number of physicians vying for patients.

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    1 Comment for this article
    Paul Manner, MD | University of Washington
    In large part the HITECH Act and PPACA drove this. Essentially the federal government made it economically impossible to run a small practice. Apparently, it's now surprising that the only entities with deep enough pockets to cover the overhead (hospitals and multi-center groups) are now the only ones left.