The past few months have been abuzz with questions about how patients will be impacted by the Carolinas-UNC Health Care merger. As of yesterday, another hospital system in Georgia has announced that it plans to join the mix.
I’ve written before that mergers in other parts of the economy achieve greater efficiencies and result in lower prices for consumers. But in the health care industry, it’s usually the case that patients end up being burdened by higher health care costs.
Why?
Mergers themselves are not the reason why patients end up paying more out of pocket for health care. The blame can instead be placed on government rules that make it difficult for potential competitors to secure footing in the health care market and compete with the status quo.
Certificate of Need is one of those government regulations that stifles competition. Put simply, it’s a law that requires health care providers and hospitals to ask state bureaucrats for permission to change their business. However, even if the state gives the okay for a new surgery center to be built, or for a kidney dialysis unit to add more stations, competitors can stall the process.
A relevant example pertains to Triangle Orthopedic Associates (TOA), North Carolina’s largest private orthopedic practice. Years ago, TOA and Duke University Health System filed competing CON applications for an MRI machine. TOA ended up winning the bid. While Duke didn’t petition against the decision, a separate company, Alliance Imaging, did. It had previously provided MRI services to TOA and feared the loss of business that would result if TOA procured its own machine.
If that isn’t bizarre enough, check out this article my colleague and I wrote about how community hospitals in North Carolina had to slog through the CON process just because they wanted to switch from leasing an MRI machine to owning one.
