Health Affairs, 22, no. 6 (2003): 76 doi: 10.1377/hlthaff.22.6.76 © 2003 by Project HOPE	New Online   Obama's Success & Next Steps   3 Health Policy Options for President Obama   A Hybrid Proposal   Bipartisan Compromise

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Competition & Consolidation

PROLOGUE

Hospital Competition And Consolidation

Bradley Strunk and Paul Ginsburg of the Center for Studying Health System Change have noted that the high cost of health insurance is largely attributable to periods of sustained, rapid growth in underlying health care costs. For example, per capita spending for the privately insured, down slightly from 2001, advanced four times faster than overall economic growth in 2002. Interestingly, however, given that roughly half of this overall accelerated growth in health care spending emanated from increases in inpatient and outpatient hospital care, during the past two years spending on hospital care has supplanted spikes in prescription drug costs as the chief driver of the high price of U.S. health care.

Given the impact that hospital care spending exerts on the overall health care cost environment, the papers that follow provide welcome insight into the changing competitive and structural dynamics of the hospital sector, as well as the role of regulatory authority in policing this marketplace to protect public access to high-quality, affordable care. First, Allison Evans Cuellar and Paul Gertler traverse the turbulent landscape of hospital consolidation in the late 1990s, in the interests of advancing understanding of the effect of the formation of locally concentrated hospital systems on both cost and quality of care. Next, Peter Hammer and Bill Sage examine the implications for antitrust enforcement of shifting configurations in hospital–hospital, hospital–physician, and hospital–payer affiliations, posing the key question of what role regulation and public purchasing should ultimately play in maintaining the competitiveness of the hospital marketplace. Finally, Federal Trade Commission (FTC) chair Timothy Muris, in a conversation with Sage, brings us full circle by describing the role and philosophy of the commission in applying empirical evidence to enforcement actions intended to ensure that the various sectors of the health care arena—including hospitals, physicians, and drug producers—conform to basic rules of fair business practice, enabling the natural mechanisms of the marketplace to work for the benefit of consumers.

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