A new study by the National Bureau of Economic Research paints a concerning picture of the ripple effects caused by hospital mergers. The analysis, published this week, finds a direct link between rising healthcare costs following mergers and job losses among non-healthcare employers.
The research team, comprised of economists from the University of Chicago, Yale, Wisconsin, Harvard, and federal agencies, focused on the impact mergers have on employer-sponsored health insurance premiums. When a nearby hospital raises prices after a merger, the study found, employers shoulder the burden through increased premiums. This financial strain, the researchers noted, often leads companies to cut jobs rather than decrease employee wages.
“This work highlights that healthcare price growth is generating severe macroeconomic and social consequences in the U.S.,” the research group wrote in their working paper.
The study goes beyond just job losses. It details a domino effect where healthcare price hikes translate into decreased income at the county level, leading to higher unemployment rates and a financial hit for the federal government through increased unemployment insurance payments and reduced tax revenue collection.
The impact is particularly acute for middle-income workers, the study found. Since employer-sponsored health insurance premiums tend to be a fixed cost per employee, regardless of salary, these workers bear the brunt of the financial burden. High-income earners are largely unaffected by the job losses triggered by rising healthcare costs, while low-wage workers, who often lack employer-sponsored health insurance, are less impacted by premium increases.
Researchers analyzed data on 304 hospital mergers completed between 2010 and 2015, comparing prices at these merged institutions to non-merging hospitals. On average, the study revealed a 1.2% price increase within two years of a merger. However, the researchers acknowledge that this average masks significant variations in price hikes across different deals.
The study adds to a growing body of research raising concerns about healthcare consolidation, particularly among providers. While the hospital industry often defends mergers by citing potential cost savings and support for struggling institutions, researchers argue that these deals more likely result in price increases with minimal improvements in care quality.
The findings have ignited debate within the healthcare industry. The American Hospital Association (AHA) criticized the study’s methodology, questioning the data’s limitations and the exclusion of the healthcare sector in job loss calculations. The AHA also strongly condemned the research team’s linking of hospital price increases to suicide risk.
“Quite frankly, it is unconscionable given the lengths hospitals go to every day to save people who have attempted or are at risk of taking their own life,” wrote Molly Smith, Group Vice President for Public Policy at the AHA.
Despite the criticism, the study’s findings add fuel to the ongoing conversation about hospital consolidation in Washington D.C. As hospitals continue to grapple with financial pressures, policymakers on both sides of the aisle are increasingly scrutinizing industry mergers and their potential impact on patients, workers, and the overall healthcare system.
