Brief 2024 Legislative Recap: Health Care Consolidation and Competition

Research from the American Medical Association suggests health system consolidation is rising nationwide, prompting state policymakers to examine its impact on costs and quality of care. This includes horizontal consolidation, i.e., between the same types of organizations like hospitals, and vertical consolidation, i.e., across different types of providers, like hospitals acquiring physician practices. 

A growing body of research indicates that consolidation leads to higher prices, though research on its impact on quality are mixed. Some providers maintain consolidation can enhance access to care and is essential for some rural providers and facilities to remain viable. 

At least 34 bills relating to health system consolidation and competition were enacted across 22 states in 2024. These policies included oversight of health system mergers and acquisitions, health system contracting reforms, modifying certificate of need review, and more. 

State Oversight of Health System Mergers and Acquisitions 

At least 35 states require hospitals, health systems, physician groups and/or private equity firms to notify authorized state entities—such as the state attorney general or health agency—of certain proposed mergers, facility closures or contractual affiliations. In 2024, at least three more states added these requirements.

Indiana now requires certain health care entities to provide written notice to the Office of the Attorney General at least 90 days prior to certain mergers or acquisitions. New Mexico grants the attorney general authority to approve or deny certain mergers or acquisitions involving hospitals. In making these determinations, the attorney general may consider factors such as potential reductions in access to essential services, market share, patient costs, provider networks and potential impacts on health outcomes. 

Maryland’s bill specifically addresses the acquisition of a nursing home, requiring acquisition request to be submitted at least 60 days prior to closing to the Maryland Health Care Commission. 

Health System Contracting Reform 

Combining input from multiple sources, The Source on Healthcare Price and Competition, a project of U.C. College of the Law, maintains that health systems with larger markets share may be able to negotiate anticompetitive contracting terms and obtain higher prices and reduce competition. In response, legislators at both the federal and state levels have responded by prohibiting or limiting contract terms that might have anticompetitive effects. In April 2024, the Federal Trade Commission announced a final rule banning noncompete clauses nationwide, though pending litigation may impact this rule.

Multiple states took action regarding contract regulations in 2024. Illinois outlawed noncompete contracts for licensed mental health professionals who specifically provide services to veterans and first responders. Louisiana voided noncompete agreements after three years from the effective date of the agreement, specifically applied to the primary care sector. Maryland voided noncompete clauses for certain health care professionals making less than a $350,000. For professionals who exceed this threshold, the clauses will be limited to one year after termination of employment and limited to a 10-mile radius.

Setting Sights on Price Transparency 

Multiple states enacted legislation promoting price transparency for certain health care entities in 2024. Increased price transparency aims to empower consumers and encourage competition by providing clearer information about the costs of health care services. Some state action focuses on implementing federal price transparency requirements for hospitals and health plans, and in some cases, establishes additional state-specific requirements. At least eight states enacted nine bills related to price transparency and cost containment in 2024.

Georgia built on its existing price transparency requirements for hospitals by instructing the department to create a uniform template for reporting certain financial documents. No later than July 1, 2025, each hospital must use the established template. Colorado mandated health plan compliance with federal transparency requirements and directed plans to give consumers access to real-time cost sharing information for services. 

Addressing Facility Fees 

Facility fees, historically associated with hospital inpatient and emergency services, are traditionally charged to cover operating and administrative expenses. These fees are becoming increasingly common—in both amount and frequency—in non-hospital settings, such as physician offices acquired by larger health systems. Some research indicates that facility fees can increase overall care costs for consumers and payers. As a result, some states are limiting or prohibiting their use for certain services or settings and/or requiring transparency in health care facility fees. 

In 2024, Connecticut extended provisions prohibiting telehealth providers from charging facility fees. Maine required health care entities to prominently display information about facility fees in a location readily accessible to patients, as well as on the entity’s publicly accessible website. States have considered similar legislation in previous sessions. For example, in 2023, Indiana prohibited facility fees for care provided in off-campus office settings owned by a nonprofit hospital that has an annual revenue of at least $2 billion. 

Modifying Certificate of Need Programs 

Certificate of Need laws require approval of major capital expenditures and projects for certain health care facilities, potentially allowing states increased oversight of health system competition by reviewing changes in the health care market. Conversely, opponents believe these laws stifle competition by protecting incumbent providers. 

This session, at least 10 states enacted legislation modifying certificate of need programs. In Iowa, the Department of Health and Human Services, along with the Department of Inspections, Appeals, and Licensing, has been instructed to analyze the current certificate of need process and submit a report with recommendations to the legislature. Massachusetts established an assisted living residences commission. Among other duties, the commission is tasked with making recommendations about the processes and facility concentration. Nebraska made specific exceptions to its requirements by creating an exemption for rehabilitation and acute care beds.

As health care consolidation continues to occur, states may continue to evaluate its impact on prices and competition, along with the policy measures they can implement to address these effects.