The Market Forces Quietly Adding Thousands to Patient Bills

Anne Hug, a professor of radiology, faced a $6,000 bill after her fertility doctor initially recommended a $3,000 in-office procedure to remove a polyp in her uterus. The doctor, part of a large Ohio health system, initially planned to perform the procedure in a hospital operating room with anesthesia. However, Hug refused anesthesia and the doctor ended up performing the surgery in a freestanding surgery center owned by the same health system.

The unexpected switch resulted in a significantly higher bill. Hug questions the legality of hospitals directing patients to more expensive procedures when professional organizations recommend different approaches. The trend of vertical integration in healthcare, where one company owns or controls multiple parts of the supply chain, has been rapidly increasing.

Hospitals are buying doctors' practices and surgery centers, insurers are buying doctors' practices and specialty pharmacies, and private equity firms are buying practices and reorganizing operations before selling them to higher bidders. While this consolidation is often marketed as greater efficiency, studies show patients often face higher prices with no improved care.

These deals are occurring in a "gray zone" of competition law, with regulators under-resourced to monitor or stop them. Federal regulators, including the Federal Trade Commission and the Justice Department, are tasked with policing healthcare mergers to protect competition and patient choice. However, mergers involving doctors' practices often fall below the regulatory threshold for scrutiny, leading to consolidation through slow accretion.