California Attorney General Probes Provider Consolidation

The L.A. Times reports that a wave of consolidation among hospitals and physician groups has drawn scrutiny from the California attorney general's office amid concerns that these alliances could boost medical prices. Some hospital chains and insurance companies in the state said they have received civil subpoenas from the attorney general's office seeking information about market concentration among medical providers and the effect on healthcare pricing.

The Affordable Care Act creates strong incentives for medical providers to collaborate more on patient care in hopes that that will reduce costs in a fragmented industry. That has driven much of the acquisition activity across California and nationwide as hospitals and large medical groups merge. Some health care experts, however, worry that this consolidation will raise costs as competition lessens in certain markets. It could also cause setbacks in the small amount of progress gained thus far in achieving greater price/cost transparency.