One of the primary objectives of the recently enacted health reform legislation was to promote hospital and physician alignment, coordination and integration. Unsurprisingly, hospitals and physicians have responded to these new incentives with increased merger activity and other integration strategies. Now, in an unexpected twist, the usually business-friendly, Republican-controlled U.S. House of Representatives Committee on Ways and Means is examining consolidation activity within the health industry to determine the effect these transactions are having on efficiency and health care costs.

Over the years, hospital and insurance company mergers and physician group arrangements have been viewed through a relatively positive policy lens. While certain competitive pressures between the various health sectors exist, there has been general agreement that consolidation reduces redundancy and inefficiency, and therefore costs. However, recent studies suggest that consolidation may be leading to higher costs and lower quality. On September 9, 2011, the U.S. House of Representatives Committee on Ways and Means Subcommittee on Health held a hearing to examine stepped-up consolidation in the wake of health reform legislation.

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