Is Hospital and Physician Group consolidation driving up the cost of medical care?

The California attorney general has launched a broad investigation into whether increasing consolidation among hospitals and physicians groups is pushing up the price of medical care, reflecting increasing scrutiny by anti-trust regulators of medical-provide deals.

The probe, which has been under way for several months, is examining hospital systems’ reimbursement from major California health insurers. The regulator appears to be focusing on whether the systems’ tie-ups with physicians, as well as ownership of hospitals, have given them the market power to boost prices in a way that violates anti-trust law.

Nationally, health-care providers are rapidly merging into bigger health systems, moves that are presumed to improve efficiency. The number of hospital consolidations in 2011 was 86 – the most since 2000. Health Affairs journal suggests that concentration among health-care providers can indeed drive up health-care prices.