Big Med: Megaproviders and the High Cost of Health Care in America

There is little debate that health care in the United States is in need of reform. But where should those improvements begin? With insurers? Drug makers? The doctors themselves? In Big Med, David Dranove and Lawton Robert Burns argue that we’re overlooking the most ubiquitous cause of our costly and underperforming system: megaproviders, the expansive health care organizations that have become the face of American medicine. Your local hospital is likely part of one. Your doctors, too. And the megaproviders are bad news for your health and your wallet.

Drawing on decades of combined expertise in health care consolidation, Dranove and Burns trace Big Med’s emergence in the 1990s, followed by its swift rise amid false promises of scale economies and organizational collaboration. In the decades since, megaproviders have gobbled up market share and turned independent physicians into salaried employees of big bureaucracies, while delivering on none of their early promises. For patients this means higher costs and lesser care. Meanwhile, physicians report increasingly low morale, making it all but impossible for most systems to implement meaningful reforms.

In Big Med, Dranove and Burns combine their respective skills in economics and management to provide a nuanced explanation of how the provision of health care has been corrupted and submerged under consolidation. They offer practical recommendations for improving competition policies that would reform megaproviders to actually achieve the efficiencies and quality improvements they have long promised.
This is an essential read for understanding the current state of the health care system in America--and the steps urgently needed to create an environment of better care for all of us.

David Dranove is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University’s Kellogg Graduate School of Management, where he is also professor of strategy and faculty director of the Kellogg PhD program. Lawton Robert Burns is the James Joo-Jin Kim Professor at the Wharton School, University of Pennsylvania, where he is also professor of healthcare management, professor of management, and codirector of the Roy and Diana Vagelos Program in Life Sciences and Management.