On January 15, 2025, the Federal Trade Commission (FTC), Department of Justice (DOJ), and Department of Health and Human Services (HHS) released a joint report continuing their collaborative initiative to address consolidation within the health care sector. This initiative, launched in December 2023, aims to enhance competition and better regulate private equity investments within the industry.
In March 2024, the agencies issued a Request for Information (RFI) to collect public input on how corporate ownership trends impact patient care, affordability, and worker conditions. The RFI garnered over 2,000 responses from patients, health care professionals, industry groups, and other stakeholders, providing critical insights into the challenges and consequences of consolidation in health care.
The report synthesizes these responses and focuses on evidence, trends, and policy recommendations aimed at improving the current landscape.
The Challenges of Consolidation
The report emphasizes the growing issue of consolidation in the health care sector, particularly in metropolitan hospital markets, which have seen dramatic increases in concentration. In 2016, 90% of these markets were considered “highly concentrated,” up from just 65% in 1990. The report notes that between 2017 and 2021, mergers and acquisitions further reduced competition in the sector.
While proponents argue that consolidation leads to efficiency and improved care coordination, the report highlights the negative effects on patients and communities. It finds that consolidation has been linked to higher costs for consumers and payers, with significant price increases in concentrated markets. Moreover, hospital closures following mergers, particularly in rural areas, have resulted in fewer options for care, exacerbating health disparities. The report also suggests that larger, consolidated health systems do not always correlate with better care quality, with some studies indicating worse patient outcomes.
The Role of Private Equity
Private equity (PE) investments have further accelerated the consolidation trend in health care. PE firms have acquired physician practices, hospitals, and behavioral health services at an unprecedented rate. While these firms argue that such investments improve efficiency and foster innovation, the report raises concerns about the profit-driven motives behind many of these transactions.
PE acquisitions often rely on high levels of debt, placing financial strain on health care facilities and increasing their risk of bankruptcy. In some cases, PE firms have sold off essential assets, jeopardizing the ability of hospitals and clinics to continue operations or serve their patients. The report also highlights the closure of critical services, particularly in rural areas, which further limits access to emergency and specialty care.
Operational changes under PE ownership, such as staffing reductions and cost-cutting measures, have sometimes led to diminished care quality, resulting in negative patient outcomes. Behavioral health services, especially those serving Medicaid-dependent populations, have been particularly vulnerable to these disruptions.
Policy Considerations and Recommendations
The report reflects a strong consensus among RFI respondents for more proactive oversight of health care markets. Many commenters urged federal and state agencies to enforce antitrust laws more rigorously and scrutinize potentially harmful transactions. There is a clear call for policies that limit further consolidation and mitigate the harms caused by already concentrated markets.
A key policy recommendation is for greater transparency in health care ownership, particularly with respect to private equity activity. Respondents highlighted the need for more public disclosure about ownership, pricing, staffing ratios, and other factors affecting patient care. Some states have already implemented measures to enhance transparency, such as requiring review and approval of health care transactions. Additionally, some states have established dedicated bodies to monitor consolidation and ensure competitive markets. The report suggests that federal lawmakers could adopt uniform reporting requirements for health care acquisitions, addressing gaps in the state-by-state approach.
Conclusion
The joint report from the FTC, DOJ, and HHS provides a comprehensive review of the risks associated with consolidation in the health care market. While consolidation may offer certain efficiencies, it may come at the expense of patient care, affordability, or access to services. The findings advocate for a balanced approach, with stronger regulatory measures, more transparent transactions, and better collaboration across agencies to ensure a competitive, equitable health care system.
