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A new study says hospital supply costs don't decrease a lot after mergers. Photo: BSIP/UIG via Getty Images

New research shows hospitals aren't saving a lot of money on routine expenses — such as surgical staples, stents and implants — after they merge with or acquire other hospitals.

Why it matters: Lowering costs is one of the primary justifications hospitals give for consolidating, but this developing research indicates that argument doesn't carry a lot of weight.

By the numbers: Hospitals that were acquired in the past several years saved an average of 1.5% annually on supplies, devices and other equipment, according to the study. That equates to just a fraction of the savings that hospitals touted as a benefit of their mergers.

  • Hospitals have argued bigger systems will have more negotiating power for the things they have to buy, which will lower costs overall.
  • Most of the savings the study identified came from reduced prices for items like like spine and joint devices. But costs were not significantly lower across the board.
  • "We view this potential 'synergies on input cost' argument much more skeptically now than going into this study," said Matt Grennan, a health care management professor at the University of Pennsylvania and one of the authors of the study.
  • The American Hospital Association responded in a statement that it was reviewing the paper but argued that "regulatory barriers, including the anti-kickback law, limit the ability of hospitals to work with physicians to bring down purchasing costs further."

Go deeper

D.C.-Beijing tensions are shifting markets

Illustration: Aïda Amer/Axios

U.S. markets stand to lose $2 trillion in value if D.C. and Beijing drift further apart.

Why it matters: Political chasms are showing up in new securities regulations that put companies and investors in a bind. The rules are also another reflection of how much relations between the world’s largest economies have cooled, even as they remain economically interdependent. 

2 hours ago - Health
Axios Investigates

Documents reveal the secrecy of America's drug pricing matrix

Illustration: Aïda Amer/Axios

American businesses spend hundreds of billions of dollars a year on prescription drugs, and the bills keep getting bigger. But some of the companies promising to help rein in those costs prevent employers from looking under the hood.

Why it matters: Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they're actually providing a good deal.

Congress' chip-funding pause raises alarms

Illustration: Aïda Amer/Axios

Despite bipartisan support in the Senate, a plea by the Commerce Secretary and growing desperation from industry officials, Congress still can't get a key bill that funds the U.S. chip business over the finish line.

Why it matters: With the global chip shortage continuing to crimp the economy, the semiconductor industry has ramped up pressure for funding of U.S.-based manufacturing facilities as one remedy.