Consolidation of industries and lack of competition has been an ongoing issue for health care delivery—and a new report illustrates how some companies dominate sectors of health care that have a direct impact on costs to consumers and insurance plans.

The report, “America's Concentration Crisis,” was released by the Open Markets Institute, based on research by IBISWorld. Although most of the concern about consolidation in health care usually focuses on insurance companies or provider systems, this report outlines how industries such as medical supplies or pharmaceutical manufacturers can also be concentrated among a few names. This concentration can lead to near-monopoly conditions and drive up costs, the institute said.

“Our national healthcare debate too often misses the role of monopoly in driving up health care costs,” says Open Markets policy director Phil Longman. “What this report shows is that exorbitant prices in health care are largely a symptom of increasingly concentrated health care markets and that more rigorous antitrust enforcement is essential to solving America's healthcare crisis.”

Pharmacy and medical devices

The report outlines how a number of multi-billion dollar markets in health care are dominated by just a few companies.

For example, 61 percent of the $271 billion retail pharmacy market is controlled by just two companies, Walgreens (32 percent) and CVS (29 percent). Rite Aid is the only other major player, accounting for 6 percent of the market. Other companies make up the remaining 33 percent.

In the area of pharmacy benefit management, a $453 billion industry, four firms control 75 percent of the market. CVS (30 percent), Express Scripts (23 percent), Unitedhealth (15 percent), and Humana (7 percent) are the main players, with other companies accounting for 25 percent of the market.

In medical devices, a $39.2 billion industry, Medtronic is a dominant player. The report finds Medtronic controlling 41 percent of the overall medical device market, with General Electric at 19 percent, Abbott at 10 percent, and Danaher at 7 percent. Other companies split 23 percent of market share.

Medtronic also dominate the $1.8 billion pacemaker manufacturing market, with 52 percent of market share. Abbott comes in at 23 percent and Boston Scientific is at 14 percent; other companies account for 11 percent of the market. As the report notes, this means 89 percent of the market is split between three companies.

But market dominance also exists in smaller, more specialized industries that also play a role in health care costs. In the $3.8 billion market for syringes & injection needle manufacturing, one company, Becton, Dickson and Company, controls 64 percent of the market. Medtronic controls another 5 percent, and other firms control the remaining 34 percent.

Health care services are also concentrated

Services, whether involving direct medical care or things like patient financing, can also be consolidated among just a few players. In the $24.4 billion dialysis center market, two companies 92 percent of the market. Fresnius is at 49 percent, DaVita accounts for 43 percent, and other companies make up 8 percent of the market.

One company, Synchrony, accounts for nearly 50 percent of the medical patient financing market, where clinics offer third-party loans to patients to help pay for services. Synchrony's 49 percent of the market is the largest percentage, but Citigroup has 19 percent of the market, Wells Fargo has 9 percent and other companies account for the remaining 23 percent.

The $6 billion health care consultant market, where companies provide management analysis or expertise on acquisitions and mergers, is illustrative of another point: consolidation has increased in recent years. In 2012, the market was split four ways: the biggest slice was Other at 74 percent. Deloitee (11 percent), IMS Health Incorporated (9 percent), and Pricewaterhouse Coopers (6 percent) each had relative modest shares of the market.

In 2018, the market had changed. 76 percent of the market is shared by four groups: Accenture (27 percent), The Advisory Board (20 percent), Deloitte (19 percent), Huron (10 percent), and Other is now at 24 percent.

The report raises warnings about what the growing consolidation means for American consumers. “Such concentration is not unique to one or two economic sectors. It is persistent across a diverse range of industries,” the report said. “As the charts also illustrate, monopolistic corporations often present themselves as champions of consumer choice. But while it may appear as though there are endless brands to choose from online and on the shelf, most are owned by a few large parent companies, the array of labels a mere façade creating the illusion of abundant options.”

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Monopoly-like consolidation common in health care, study says

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