Healthcare Anti-Trust

Anti-trust laws in the United States have been effectively used to prevent monopolies in industries like telecommunications, oil and gas and computer software. Anti-trust laws are enforced in order to maintain free competition in the marketplace, which generates lower prices and incentivizes the development of high quality products. Today, hospital systems are experiencing an era of heavy consolidation, which include mergers and acquisitions and physician practice buy-outs. According to the Wall Street Journal, hospitals completed 86 merger and acquisition deals valued at $7.9 billion in 2011, which was the most in a decade. Like in other industries, this developing trend in hospital consolidations encourages price fixing and contributes to rising healthcare costs and excessive medical billing. In order to manage healthcare costs in the United States and address unfair medical billing practices, anti-trust laws should be enforced within the healthcare industry.
Hospitals receive nearly all of their income from insurance companies, which are considered third party payors. Hospitals and insurance companies conduct intense negotiations to determine hospital reimbursement rates for services provided. Traditionally, insurance companies leveraged their expansive network of providers to negotiate lower reimbursement rates. Today, however, hospitals have eliminated much of their competition, through consolidations, and provide medical services to many more patients. As such, hospitals leverage their market dominance to negotiate higher reimbursement rates from insurers. Unfortunately, consolidation within the healthcare industry runs afoul of free market objectives and limits healthy competition. This leads to higher prices, declining quality and limited access to medical care.
Hospitals are big business. According to a study by Forbes, 24 hospitals in the country with over 200 beds make an operating margin of 25% or more. That profit margin