What hospital consolidation means for the cost of an MRI

An MRI for a skier's torn ligament at Sutter Davis Hospital near Sacramento cost $1,271, while an identical scan at a nearby imaging center run by Radiological Associates of Sacramento runs only $696, Bloomberg reports. Why? Insurers say it's because Sutter has monopolized the regional hospital market and can essentially demand whatever prices it wants — often between 40 and 70 percent higher than competitors. "Sutter can charge these prices because it has acquired more than a third of the market in the San Francisco-to-Sacramento region through more than 20 hospital takeovers in the last 30 years, according to executives of Aetna Inc., Health Net Inc. and Blue Shield of California." Meanwhile, hospital officials contend the market is competitive.

This issue — largely left out of the health care reform debate — is gaining attention as the Federal Trade Commission continues to pursue collusion and monopoly cases, recently winning one in Maine after saying doctors colluded in merging two cardiology practices. "The federal Patient Protection and Affordable Care Act is looking for $500 billion in savings over the next decade to help pay for extending coverage to 32 million uninsured Americans. Yet it doesn't address the problem of market concentration — and may make it worse, said Robert Berenson, a physician and policy analyst at the Urban Institute in Washington D.C." Berenson and other health care experts say incentives in the new legislation for hospitals to coordinate care "could backfire by strengthening providers' bargaining leverage" (Waldman, 8/20).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.