(The Center Square) — Hospital closures and consolidations have become more common in Pennsylvania, and experts worry that a lack of competition could drive up prices and limit access to health care.
The House Health Subcommittee on Health Facilities met Wednesday to discuss health care trends and were warned that more information and attention on closures, mergers, and consolidations is necessary.
“The closures of U.S. hospitals has been accelerating in recent years,” Rachel Warner, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, said. “It’s been made worse by financial stressors from the COVID-19 pandemic, rising costs from labor, supplies, and drugs, and longer hospital stays.”
When hospitals shutter, it creates problems beyond access: health care can get more expensive.
In rural areas of other states like Tennessee, consolidation has led to local monopolies where quality has declined and charitable promises have gone unfulfilled.
“One of the most concerning trends that we see in health care markets today is decreased competition or market consolidation,” Warner said. “Most hospital markets today are highly concentrated.”
Though some mergers can improve coordination, avoid duplicate services, and lower some operating costs, Warner noted, “hospital mergers increase commercial health care prices.”
Those higher prices, she said, eventually fall on patients in the form of higher insurance premiums.
Patrick Keenan, director of consumer protections and policy for the Pennsylvania Health Access Network, noted that Republicans and Democrats widely agree that legislators should promote competition and oversight.
“That really charts the opportunity for this committee to consider all of these different variations — whether it’s access to care, whether it’s cost, whether it’s the economic impacts of a closure — and really start to consider what actions might be best to empower local choice and access,” Keenan said.
One change they warned against, though, was returning to certificate of need rules, which require health systems to get approval before opening up a facility. Instead of restricting new facilities, Warner argued that patients get better results when providers compete.
“There’s an overwhelming preponderance of evidence showing that competition is good for reducing prices and, in some cases, improving quality,” Warner said. “There are few things that almost all health economists agree on, but the utility of certificate of need is one of them. We should not return to a landscape in which we use certificate of need to limit entry to the market because it reduces competition.”
Pennsylvania’s attorney general’s office argued that it could better promote competition in health care if it had more anti-trust tools within its power.
“Pennsylvania’s the only state without an anti-trust statute,” Tracy Wertz, chief deputy attorney general, said.
She argued that a statute would give the attorney general “better investigative tools” like subpoena power to get more information from health care companies. Pre-merger notification provisions like some other states have, she said, would also help monitor unfair market practices.
“It’s important for our office to know what’s going on in the marketplace,” Wertz said.
Legislators were looking for new ideas.
“Some change is absolutely inevitable and necessary,” Rep. Lisa Borowski, D-Newtown Square, said. “My concern is what we’re seeing now is that these changes aren’t necessarily accommodating the needs of those communities that the hospitals are designed to serve.”
