OCA study points to lack of competition behind high Monterey County hospital prices; AB 1415 broadens transaction review

OCA staff presented a new investigative study of hospital market competition in Monterey County that finds inpatient prices among the highest and outpatient prices the fourth-highest in California. The analysis, prepared with Arnold Analytics, reports that higher operating costs, wages or quality do not explain the elevated prices and that concentration and lack of competition are the most plausible drivers.

Deputy Director Vishal Plegani told the advisory committee the study looked at three county hospitals (Community Hospital of the Monterey Peninsula, Natividad Medical Center and Salinas Valley Medical Center) and found "no evidence that higher operating costs, wages, or quality explain the higher prices," increasing the case for additional policy options to curb pricing power, such as hospital price caps or global budgets.

Staff also reminded the committee that AB 1415, enacted in October, amends OCA's statute to expand the cost and market impact review (CMIR) program's scope and broaden who must file transaction notices to include private equity firms, hedge funds and management services organizations. OCA said it is continuing stakeholder engagement and plans regulatory updates to implement the expanded filing requirements.

Committee members suggested additional market-level breakdowns, examination of low-value care and attention to vertical integration and PBM ownership structures; staff noted ongoing efforts to refine definitions and pursue additional analysis via the HPD and other resources.

Next steps: OCA will continue rulemaking and stakeholder outreach, with DSG3 regulatory updates and a planned advisory committee briefing in April.