As is well known, hospital mergers and acquisitions have skyrocketed in recent years, thanks in no small part to the Affordable Care Act. In many ways, the industry took the government's encouragement to work together as carte blanche to grow their businesses; it has done so by expanding market presence and taking over struggling local hospitals.
It seems there are daily new merger announcements promising better access to care at a lower price point. And yet, according to a recent report from the American Hospital Association, only 10 percent of the nation's community hospitals were involved in M&A activity between 2007 and 2012.
Power struggles are emerging as the nation races toward 2014. The hospital industry and FTC, as discussed in the Executive Briefing. A new, convoluted paradigm emerges as increased consolidations lead to stricter antitrust review, continue to fight. The FTC views some mergers, such as Phoebe Putney-Palmyra Medical Center, as anticompetitive, thus, says they would increase healthcare costs. But in its report, the AHA claims M&A does not promote anticompetitive nature, believing intense scrutiny on deals is overblown.
However, the FTC may be onto something. Other recent reports, including one from the American Enterprise Institute, indicate that M&A has caused costs to rise without improving quality. A New York Times article published just yesterday and titled Health Care's Overlooked Cost Factor indicates that not only do costs increase, but quality of care decreases and more alarmingly, uninsured rates may increase.
Others are also raising red flags against hospital M&A activity out of concern for access to care. The ACLU of Washington has spoken out against M&A in Washington State, fearing the recent string of mergers involving Catholic health systems will limit access to women's healthcare and that secular hospitals acquired by religious-based systems will be forced to limit their services to women. ACLU representatives sent a letter to Gov. Jay Inslee, asking for a moratorium on M&A decisions for six months. It is doubtful that M&A opposition will deter the industry's continued efforts to consolidate. And while hospital M&A activity may be down from 2012, other trends are emerging. So what's the next big thing for mergers. There are rumblings of ACO mergers, something my colleague and resident ACO expert Laura Beerman is watching very closely (Follow her on Twitter at @LauraBeermanHLI).
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