FORECLOSURE ISSUES IN VERTICAL HEALTHCARE MERGERS

By James F. Nieberding, Ph.D.¹

There has been an increase in consolidation and vertical integration in the U.S. healthcare industry. For example, one study found that the number of physicians in healthcare providers that have vertically integrated with hospitals has doubled in the past decade, a trend that is expected to continue with an increasing number of Medicare beneficiaries being directly affected by this vertical integration.² Another stated that the percentage of primary care physicians working in practices owned by a hospital or health system has risen dramatically in recent years, increasing by 57% over the period from 2010 to 2016.³ And, an April 2024 report found that as of 2022, 58.5% of physician practices were owned by hospitals/health systems (or other downstream corporate entities), continuing a decade-long trend away from private practice.⁴

This consolidation and vertical integration in U.S. healthcare has been met with increased scrutiny from policymakers and antitrust agencies.⁵ The focus on acquisitions involving hospital systems, large insurance companies, health care providers (e.g., physician groups), and pharmacy benefit managers (PBMs) has resulted in high-profile merger investigations and enforcement actions. One area of increased antitrust concern involves the consolidation of upstream healthcare providers with downstream hospitals or large insurance companies into vertically-integrated health systems.

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