CA hearing tomorrow on regulation of profitable mergers in healthcare industry / Public News Service

Healthcare industry mergers are a major contributor to high healthcare costs, and now California lawmakers are considering legislation to regulate more of these mergers.

Assembly Act 2080 will be heard before the Senate Health Committee on Wednesday. It would give the Attorney General the power to condition or even block mergers between for-profit hospitals and other large healthcare organizations.

The California Hospital Association contradicts the billon the grounds that this would give the Attorney General too much power and stifle many types of custody arrangements.

Anthony Wright, executive director of the nonprofit advocacy group Health Access California, countered that more consumer protections are needed.

“This bill goes to the heart of why healthcare costs are so inflated,” Wright argued. “And it ensures that there is public oversight so that access is maintained and costs are not exaggerated as the healthcare industry consolidates.”

The Attorney General already has oversight authority to consider mergers of nonprofit hospitals, securing $575 million in 2019 settlement from Sutter Health about fees, they drove up prices. Sutter, the largest healthcare provider in Northern California, agreed to end the policy, which the state deemed anticompetitive. The bill would ban anti-competitive contracting across the industry.

Wright pointed to a 2018 University of California-Berkeley studywhich found that hospital mergers have led to much higher prices.

“Sometimes there can be a loss of access if the acquiring entity decides to discontinue certain services,” Wright explained. “Sometimes the merged entity now has more market power to charge higher prices.”

The bill also provides for an appeals process if a merger is rejected. The measure has already been passed in Parliament. If it goes through the Senate Health Committee, the next stop would be the Judiciary Committee.

Disclosure: Health Access contributes to our health reporting fund. If you would like to support public interest messages, click here.

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