Partner Kevin Pflum and Manager Christian Salas co-authored an article in the May 2025 edition of the CPI Antitrust Chronicle, a publication by Competition Policy International.
In recent years, the US Department of Justice (DOJ) and the Federal Trade Commission have placed renewed emphasis on examining the impact of consolidation on monopsony power in labor markets, with particular attention to the healthcare sector. The DOJ writes in a statement, “When competition for [healthcare workers’] labor suffers—resulting in lower pay and even worse working conditions—the health of the nation suffers, too.”
In their article, “Monopsony Power in the Hospital Labor Market,” Drs. Pflum and Salas summarize the findings from the economics literature on labor competition in healthcare markets—hospital labor markets in particular—and their implications. They then describe the types of evidence that may be most informative to merging parties and antitrust enforcers when assessing the potential competitive effects on labor resulting from a health system merger.
Drs. Pflum and Salas’s review of the literature finds that hospitals likely possess monopsony power. However, the evidence that consolidation increases hospitals’ monopsony power over labor is less developed. More research is needed to develop predictive frameworks for assessing the labor impacts of healthcare consolidation. The authors conclude that, for now, potential labor market effects from any healthcare merger will have to rest on careful analysis of the specific evidence of head-to-head competition present in the data and documents.
