USD Health Law Prof: Sanford-MeritCare Merger Means Monopoly, Higher Costs

Meanwhile, here in South Dakota, the free market is working to jack up health care costs. KELO's Perry Groten has the guts to post a serious economic critique of the merger planned by Sanford (one of his boss's biggest sponsors) and North Dakota's MeritCare. Groten cites USD health care law professor Michael Myers:

"I predict that this is going to be a strong system, no question about that from a seller's perspective, can't argue with that. It's just going to be bad for health care overall," Myers said.

Myers was CEO of St. Mary's Hospital in Rochester when it merged with Mayo in 1990. He says patient costs rose in the aftermath of that merger and he expects the same will happen with Sanford's merger with MeritCare.

"Take a look at their right wrist. They have well-developed right wrists from cranking-up those gol-darn prices," Myers said.

Myers says such mergers create price spikes because there's no competition to keep costs down. He adds that an expanded health system adds layers of bureaucracy and in turn boosts inefficiencies, further driving up costs.

Myers says another result of the merger will be over-treatments, where doctors perform unnecessary tests and procedures, simply as a way to generate more revenue [Perry Groten, "USD Law Professor Critical of Sanford Merger," KELOLand.com, 2009.07.17].

That's the free market at work, kids: more bureaucracy, unnecessary tests, and good old greed driving up your costs.

It's worth noting Dr. Myers's comments may not make his bosses terribly happy, either, given the revenue stream from Sanford to our southernmost campus. Kudos to Groten and Myers both, for showing some free-press and academic-freedom moxie.

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p.s.: note Sanford CEO Kelby Krabbenhoft's surprising admission that the merger is also about doubling its political buying power:

Krabbenhoft says that leverage will help access more political pull when it comes to the hot topic of health care reform.

“Instead of two Senators and one Representative in South Dakota, now add to that two Senators and one Representative in North Dakota,” Krabbenhoft said [Kelli Grant, "Sanford MeritCare & Political Pull," KELOLand.com, 2009.07.17].

Kelli, I almost can't believe you got him to say that. Looks like buying South Dakota isn't enough; the health care giant wants to rename all of Dakota Territory "Sanford Dakota."