More supplier consolidation in 2022

Forty percent of respondents to our annual State of the Industry survey expect vertical vendor integration to increase this year.

Scratch beneath the surface of almost any recent health care trend and you’ll find that they aren’t as new as they might first appear.

But there’s really nothing new about health care consolidation. Hospitals have for decades been consolidating into larger systems that dominate the market. According to a 2020 Medpac report, 90% of hospital markets met the Federal Trade Commission’s definitions of “highly concentrated” in 2017 and there has been no indication that the trend is reversing since then.

The same is true on the paying side of the street. The Medpac report indicates that 21 of 51 areas (states plus the District of Columbia) had super-concentrated group insurance.

While consolidation isn’t new, it ranked among the top concerns of 100 respondents to our annual State of the Industry survey. In fact, this was the top issue when we asked respondents to rank the issues in order of importance.

Related: Managed Healthcare Executive® State of the Industry Survey, A Look Ahead, First Installment

We also asked which consolidation trend is most likely to accelerate in 2022. Vertical provider integration (40%) and horizontal provider integration (24%) garnered significantly more responses than integration vertical payers (13%) and horizontal payer integration. (12%).

The Biden administration has said it will tighten antitrust scrutiny of consolidation in all aspects of the economy, including health care. A solid majority (59%) of respondents to our survey said they support the administration using antitrust law to slow or block consolidation among vendors.

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