Healthcare Consolidation in Athens

Hello! Our names are Ruhee Merchant (Policy Development Director & Senior Advisor) and Shriya Garg (Co-Executive Director). Ruhee is a senior majoring in Regenerative Bioscience and minoring in Spanish and Public Health. Shriya is a third-year student studying Genetics and Economics, on the pre-med track! In this post, we will talk about how Athenians face exacerbated healthcare costs due to market consolidation and limited healthcare competition. We also point to potential solutions to overcome rising healthcare prices and premiums for Athens residents.

Why are healthcare prices rising?

The cornerstone of economics is simple: less competition = higher prices.

This concept applies not only to the food we buy, but also the care we receive. When hospitals and insurers consolidate, their market power increases, allowing them to set prices and limit competition. This has severe implications for patients. With insulated prices, hospitals can pass their capital costs to patients and taxpayers. Over the last decade, dozens of Georgia hospitals have been acquired or merged with a larger healthcare system, and the data indicates that patients can feel the effects: on average Georgia hospitals charge private insurers 344.73% of what they charge Medicare for equivalent services.

Athens Equivalent: A Local Case Study

Market consolidation can be found in Athens too. On October 1st, 2016, Piedmont Healthcare took over Athens Regional Medical Center (ARMC). Enduring leadership turnovers and having ~$200 million of bond debt, ARMC looked to larger health care organizations for potential help. Piedmont invested $325 million in new capital for ARMC. While Athens Regional retained its local control, board, and physician representation in the council, Piedmont brought forward more specialized and high tech medical equipment and treatments. Now, Piedmont is one of two major providers in Athens – distributing healthcare to over 128,711 residents.

We can measure market concentration using the Herfindahl-Hirschman Index (HHI). In 2021, the American Medical Association (AMA) reported that Piedmont Athens had an HHI of 5,435 with a 65% share of the market, whereas the national weighted average HHI was 4,062. From the HHI, we can infer that the degree of consolidation in Athens is larger than that of the nation at large. Thus, patients’ choices are limited between few providers.

Consolidation of Health Insurers

Consolidation of insurers layers on top of the healthcare consolidation issue. Even with a competitive provider market, if insurance markets are not competitive, consumers will not experience the full breadth of cost savings. Most Georgians receive employer-sponsored health insurance, however around 10% don’t have access to this and face challenges finding coverage in the individual market. This is primarily due to the lack of choices. In 2018, only 4 carriers operated in the individual market and 145 counties only had 1 carrier. This reduced any competition, leading to lower reimbursement and higher insurance rates. In 2019, over 1.5 million Georgians relying on the individual market plans were uninsured. To mitigate this, Governor Kemp passed the Patients First Act (PFA) to bring a reinsurance program to Georgia and also created the first state-based healthcare exchange, Georgia Access.

Despite the PFA, one 2025 AMA report illustrated that Athens’ total HHI is 3105 with Elevance Health composing 49% market share and Aetna composing 19%. This type of consolidation creates deadlocks in negotiations between hospital systems and insurance providers. In fact, former Governor Nathan Deal had to mediate a contract dispute between Piedmont Athens Regional and Blue Cross Blue Shield (BCBS), a major state health benefit plan administrator, when many patients found their provider out of network. This contract expiration affected more than 500,000 individuals. Had Piedmont and BCBS not come to an agreement, many University of Georgia employees would be forced to pay out of pocket at Piedmont facilities, a substantial share of the market.

Certificate of Need (CON) Law

Lastly, Certificate of Need (CON) can reinforce market consolidation and limit competition. Georgia’s CON law regulates the expansion of healthcare facilities, requiring providers to prove community need prior to building a new service facility. This CON law extends to general, acute care, specialty hospitals, and freestanding emergency departments, nursing homes and home health agencies, nursing homes and home health agencies, and more. Furthermore, CON law institutes unnecessary guardrails that delay the expansion of services. Those seeking to expand must file for a letter of intent, submit an application, have a “60-Day-Meeting” to discuss potential factors for denial, and appeal any denials. As a result, CON laws have led to 30-48% fewer hospitals, 14% fewer ambulatory surgery centers, 30% fewer rural hospitals, and 20% fewer psychiatric care facilities.

In healthcare markets like that of Athens, CON law prevents new healthcare providers from entering, leaving Piedmont and St. Mary’s Healthcare System to dominate the decisions of local Athenians.

Potential Solutions

Several solutions exist to circumvent the growing market power of few healthcare providers. First and foremost, increased competition has become essential to capping healthcare costs; luckily, there are many strategies to get us to that point.

1. Strengthen scrutiny of healthcare mergers and acquisitions through anti-trust enforcement: The Federal Trade Commission (FTC) and the Department of Justice’s (DOJ) Antitrust Division have extensive rules and regulations that permit and restrict certain mergers and acquisitions from occurring. However, the current standards often underestimate the impact of consolidation on regional markets. By incorporating enhanced regulations that account for geographic healthcare access or regional market share, the FTC and DOJ could help reduce the amount of market consolidation we currently have.

2. Use site-neutrality payments to reduce incentives to increase market power: Site neutral payments would ensure that in-hospital and office services are priced at the same level. Currently, site-neutral payments do not exist, leading hospitals to provide services at a higher cost than off-site services – citing high overhead costs as the reason for doing so. Since in-hospital services are more lucrative for hospitals, these organizations are incentivized to consolidate with off-site offices and service providers – increasing their overall market power. By using site-neutral payments, or ensuring that the price of service in hospitals and off-site locations are the same, this market consolidation incentive would cease to exist.

3. Repeal or reform CON law to reduce barrier to entry in the healthcare market: Georgia faces extreme healthcare provider shortages, especially in rural areas. By eliminating the regulatory barriers to opening healthcare facilities and providing services to those in need, Georgians may face increased access to care and lower costs – due to increased competition and reduced market power.

4. Introduce patient-facing competition techniques (i.e. price transparency): Increased price transparency will equip patients with adequate information to make informed decisions about which providers provide the greatest quality and lowest cost. While strides are still yet to be made, the Trump Administration did note in their “Make America Healthy Again” platform that “Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information” was among one of their main focal points.