3. Mergers Can Drive Care Costs Higher
When hospital markets become less competitive, the cost of care often increases. In Indiana, inpatient prices rose 13% in hospitals that merged. Another study found that prices at monopoly hospitals are 12% higher than in markets with four or more rivals. Even cross-market mergers, when hospitals in different geographic locations combine, can drive prices higher.
Dr. Werner told this news organization that more significant price hikes of 20-30% aren’t unheard of , with reimbursements by some commercial insurance companies rising as much as 50% . “That’s the direct price that the insurers pay, but the burden of those higher prices ultimately falls on patients through higher premiums,” she said.
Still, the American Hospital Association (AHA) says that mergers and acquisitions can significantly lower annual operating expenses per admission and reduce inpatient readmission rates and mortality measures. In comments to the FTC , the AHA stated that mergers could provide a lifeline for rural and community hospitals struggling with shrinking payer reimbursement and rising labor and supply costs. The business arrangements also could ensure these communities maintain continuity of care.
Although a cross-market merger may initially benefit cash-strapped rural hospitals , Dr. Werner urged caution.
“In the long run, it’s not clear that it is good for patients because we start to see decreased access to some types of service, like labor and delivery, which are services needed in rural markets,” she said.
4. Mergers to Watch in 2024
Ms. Boudreault, who represented RWJBarnabas in the abandoned Saint Peter’s transaction, says the courts widely accepted the old merger guidelines, and it will take time to see how the new measures are interpreted. “The guidelines don’t yet have the force of law, but they can be persuasive to a court.”
Looking ahead, she is watching how Steward Health Care navigates its impending financial collapse . The nation’s largest private for-profit health system was previously owned by private equity firm Cerberus Capital Management and includes nine Massachusetts hospitals plus entities in at least seven other states.
Ms. Boudreault also plans to monitor Jefferson Health’s intent to merge with Lehigh Valley Health Network. “It’s a pretty big deal because they would become a 30-hospital system,” said Ms. Boudreault. The newly formed network would become the largest employer in Philadelphia.
5. Merger and Acquisition Reversals Unlikely
Dr. Werner said that mergers and acquisitions are complicated business moves that are nearly impossible to undo once approved, so it makes sense for agencies to continue to evaluate them closely.
“The costs of healthcare are borne by us as a society,” she said. “We’re going to have to live with the ill effects of a consolidated market once we let hospitals merge, so they deserve additional scrutiny.”
A version of this article appeared on Medscape.com.