In recent years, hospital closures and consolidations have become increasingly prevalent in Pennsylvania. Experts warn that this trend may have serious repercussions, including rising healthcare costs and restricted access to medical services. On Wednesday, the House Health Subcommittee on Health Facilities convened to discuss these healthcare trends and emphasize the need for greater attention and information on closures, mergers, and consolidations in the state.
Rachel Warner, the Executive Director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, stressed that the closure of U.S. hospitals has been on the rise. Several factors have exacerbated this issue, including financial strain caused by the COVID-19 pandemic, escalating expenses related to labor, supplies, and pharmaceuticals, and extended hospital stays.
The consequences of hospital closures extend beyond mere accessibility; they also result in elevated healthcare costs. In other states, such as Tennessee, consolidation has led to local healthcare monopolies where the quality of care has deteriorated, and charitable commitments have remained unfulfilled.
Warner pointed out that one of the most alarming trends in healthcare markets today is the diminishing competition and increasing market consolidation. Most hospital markets are highly concentrated, and while some mergers can enhance coordination, eliminate redundant services, and reduce operational costs, they tend to drive up commercial healthcare prices. Ultimately, these elevated prices are borne by patients in the form of higher insurance premiums.
Patrick Keenan, the Director of Consumer Protections and Policy for the Pennsylvania Health Access Network, highlighted bipartisan consensus on the need for legislators to promote competition and oversight. He emphasized the committee’s opportunity to consider various factors, including access to care, cost implications, and the economic repercussions of hospital closures. Keenan urged the committee to explore actions that empower local choice and access.
However, one change that experts cautioned against was a return to certificate of need rules, which mandate that health systems obtain approval before establishing new facilities. Warner argued that competition among providers yields better outcomes for patients. She cited a wealth of evidence supporting the notion that competition is instrumental in reducing prices and, in some cases, enhancing quality. Warner underscored the consensus among health economists that certificate of need restrictions should not be reinstated to limit market entry, as it would stifle competition.
The Attorney General’s office of Pennsylvania proposed that it could better promote competition in healthcare with increased anti-trust tools at its disposal. Tracy Wertz, Chief Deputy Attorney General, pointed out that Pennsylvania is the only state lacking an anti-trust statute. Such a statute would provide the Attorney General with more effective investigative tools, including subpoena power to gather information from healthcare companies. Pre-merger notification provisions, similar to those in place in other states, would aid in monitoring unfair market practices.
Wertz emphasized the importance of keeping the Attorney General’s office informed about marketplace developments. Pennsylvania legislators are actively seeking new ideas and approaches to address these healthcare challenges. Rep. Lisa Borowski expressed concern that current changes may not adequately address the needs of communities that hospitals are designed to serve.
