HOSPITAL MERGERS: Nonprofits Should Receive Same Scrutiny

      A Sacramento Bee editorial pushes for state legislators to approve "a bill, ( AB 254) that gives the state oversight of nonprofit hospital mergers." The editorial points to evidence that shows nonprofit hospitals' pricing behavior "becomes increasingly similar to for-profits as their share of the market increases." Noting that three firms now control 82% of the beds in Sacramento's hospital market, the editorial questions "what would happen if one merged with another, creating a chain that controlled half the market?" Referring to a Health Affairs study suggesting that a large not-for-profit chain would raise prices 10% while a for-profit chain would increase prices 20%, the Bee asserts that "[t]he bigger their market share, the higher the price for care." The editorial notes that AB 254 would give Attorney General Bill Lockyer (D) "the same authority to review nonprofit hospital mergers as the office now has to review for-profit mergers." Arguing that the California's hospital industry consolidation "shows no signs of stopping," the editorial concludes that "[h]ospitals may indeed need to consolidate in order to survive. Yet mergers may have their limits before they start to harm, not help, the health care system. AB 254 is a sensible expansion of government oversight" (8/23).