Anti-aging startups. Hospital consolidation. Prices vs. utilization paper.
We gonna party like it’s ya birthday
It’s been officially one year since this newsletter launched. I just wanted to thank all 44k+ of you reading for being a part of this, and hopefully it’s brought some value to you. And if it has, tell a friend! If it hasn’t, tell me what you’d like to see more of!
I saw this ad the other day while walking down the street. We get it, you consolidate.
When the Affordable Care Act was designed, one hope was that hospitals would join together and streamline their processes to bring down prices and provide a better patient experience.
And many hospitals have consolidated! That part was true. Below are the M&A trends of medical facilities, care centers, etc. from the CB Insights database. You can do this search yourself here.
So pricing must have gone down and the patient experience must have become more seamless right?
*whistles and looks away*
I’ll explore the patient experience aspect another day but for now it’s worth looking at prices.
The reality is that hospitals and physician groups have slowly been building into monopolies by acquiring lots of smaller practices and centers. If you look at the number of metropolitan areas that classify as having high concentrations of hospitals, specialists, and primary care physicians, the trend is upward across the board. More specialists and primary care physicians in particular are joining large physician groups resulting in more highly concentrated markets according to this study.
And when hospitals do end up in a monopoly situation, the prices are miraculously higher by more than 15%. This analysis studied market concentration vs. a basket of inpatient services and a group of pretty common procedures.
Until now the anti-trust cases have rarely happened here, mostly because it’s traditionally been a lot of small acquisitions vs. big name ones. The fact that the Federal Trade Commission (FTC) transaction reporting threshold is $84M probably doesn’t help. in 2014, of the 27 that crossed that threshold, only one went beyond a preliminary investigation.
If the lack of anti-trust involvement continues, then I expect the consolidation trend will as well. But this could change with the new Centers for Medicare and Medicaid Services chief mentioning hospital consolidation as an area she wants to examine. Either way we’ll be keeping tabs.
For CB Insights subscribers, we took a look into which of the large hospital groups are the most active investors and acquirers of hospitals. We also looked into the kind of digital health companies they tend to invest in.
More Data Please
Post Flatiron acquisition, we took a look at 6 other oncology data companies we think could be potential acquisition targets and who the acquirers might be.