It was a pleasure to hear Rena Conti present yesterday on her work on the effect of physician and health system consolidation on the prices of outpatient prescription drug-based cancer care. She has developed some very interesting data on how steeply the cost of cancer care rises once consolidation occurs, with special attention to the price of the outpatient prescription drugs administered. Since outpatient prescription drug cancer care is a value center for a number of acute care facilities, we should all be concerned about how the price of this care -- predominantly from increasing the spread between the center's acquisition cost for these prescriptions and and what these facilities may charge insurers for these prescriptions appear to contribute to the price run up.
Rena Conti is piecing together a compelling competitive effects story about vertical integration. She has yet to test whether the end result of these price run ups is that access to care or cost to final consumer are involved, so the story must still unfold. Still, the presumption that most vertical mergers do not raise competitive concerns and are likely pro-competitive (because of improved economic efficiency) is going to have a little test here.
It may be that in the context of fee for service out-patient health system-affiliated prescription drug cancer care, where providers have extraordinary influence on the type of treatment offered and the intensity of the treatment offered, that Rena Conti has found a exception to the general rule favoring vertical mergers. Or, it may be that her searching analysis might well be turned elsewhere in our health care system where the profit is on the spread and the provider is a powerful influencer on treatment type and treatment intensity
Time will tell if this is cancer care's version of unilateral competitive and institutional incentives to raise downstream prices after a vertical merger. I watch her work with interest.