Economic Impact of Hospital Mergers: The Hidden Costs
Over the last twenty years, nearly half of all Maine hospitals have consolidated into just two dominant health systems. Hospitals have touted these mergers as opportunities to streamline efficiencies and improve quality and affordability, but new research from Yale health economist, Zack Cooper, calls this assertion into question.
In two studies from earlier this year, Dr. Cooper and his fellow authors from the University of Chicago and Harvard found that mergers the FTC could have challenged as predictably anti-competitive led to price increases of 5% or more. Follow-up research in the National Bureau of Economic Research found that non-health care employers have responded to price increases by reducing their payroll and cutting jobs for middle-class workers. For the average county, a 1% increase in health care prices resulted in an aggregate income reduction in the area of approximately $8M annually.
This critical research lends credence to the increasingly accepted view that rising health care costs are dragging down the wider economy, and it raises important policy questions about how we address health care affordability. In this presentation, Dr. Cooper will discuss his findings and outline strategies to tackle this pressing challenge.
ABOUT ZACK COOPER
Zack Cooper is an Associate Professor of Public Health and Associate Professor of Economics at Yale University. He also serves as Director of Health Policy at Yale's Tobin Center for Economic Policy. Professor Cooper is a health economist whose work is focused on producing data-driven scholarship that can inform public policy. In his academic work, he has analyzed the impact of competition in hospital and insurance markets, studied the influence of price transparency on consumer behavior, investigated the causes of surprise out-of-network bills, and examined the influence of electoral politics on health care spending growth. Cooper has published his research in leading economics and medical journals including the Quarterly Journal of Economics and the New England Journal of Medicine. He has also presented his research at the White House, the Department of Justice, the Federal Trade Commission, and the Department of Health and Human Services.
In January 2021, Zack Cooper and Fiona Scott Morton launched the 1% Steps for Health Care Reformproject. The aim of the project is to harness the power of rigorous economic scholarship to identify tangible steps that can be taken to reduce health care spending in the US without harming quality. The project includes 16 briefs written by leading economists that describe 16 specific interventions, which would collectively lower health care costs in the US by approximately $400 billion annually. You can hear a description of the project on the Freakonomics Podcast (Part 1and Part 2).
Cooper received his undergraduate degree from the University of Chicago and his PhD from the London School of Economics, where he received the Richard Titmuss prize for Best PhD thesis. He was an Economic and Social Science Research Council Postdoctoral Fellow in economics at the LSE’s Centre for Economic Performance where he remains a Faculty Associate. Cooper is a Faculty Research Fellow at the National Bureau of Economic Research and a 2019 winner of and Andrew Carnegie Fellowship from the Carnegie Corporation of New York.
His research on health care spending on the privately insured can be found at: healthcarepricingproject.org.
