Dive Brief:
- Patients faced higher prices and diminished quality of care at independent hospitals following their acquisitions by health systems, according to new research from health insurer Elevance Health.
- Acquisitions resulted in a 6% reduction in operating costs on average, in part due to personnel reductions. However, average inpatient prices for commercially insured patients rose 5%, and readmission rates for cardiac care patients increased up to 12% and remained elevated for three years post-acquisition, the study found.
- The report noted mergers are on the rise and asked stakeholders to keep their findings in mind when considering additional consolidation.
Dive Insight:
This study analyzed hospital admissions data from Elevance-affiliated commercial health plans in 20 states between 2012 and 2018 to determine the impacts of mergers on quality and access to care.
The analysis is one of many suggesting hospital consolidation raises prices, but is valuable because it relies on actual price data from health plans, instead of average prices from data reported to the federal government, according to Elevance’s Public Policy Institute, which authored the report.
While the trend toward consolidation may be financially beneficial for independent hospitals, acquisitions led to worsening quality metrics, including higher readmission rates for patients, the study found. In-hospital mortality rates did not change.
Acquired hospitals that experienced greater staff reductions experienced greater readmission rate increases, suggesting that staff cuts may be a contributing factor in reduced quality of care, Elevance said.
Independent hospitals are increasingly a rarity in the healthcare landscape. From 2000 to 2020, the share of hospital beds that are part of health systems rose from 58% to 81% nationwide, according to the report. In a quarter of hospital markets, not a single independent hospital remains, according to Dartmouth Atlas data.
Merger and acquisition activity dipped during the pandemic, but has since rebounded to pre-pandemic levels. In the second quarter, hospitals inked twenty deals — including three megamergers — often across geographic markets.
Driving the recent wave of consolidation is an expressed desire for operational efficiency, according to consultancy Kaufman Hall. This echoes previous research, which suggests independent hospitals have opted to consolidate with larger health systems in order to secure more resources, negotiate favorable contracts with payers and manage administrative burdens.
Hospital mergers have been met with skepticism in Washington and in some states. Trinity Health killed a deal to acquire a hospital in central California after the state attorney general moved to add caveats to the merger, including price caps, Cal Matters reported.
Most recently, politicians in Minnesota crafted a law to give their attorney general oversight into some healthcare mergers, delaying and ultimately helping kill a proposed merger between Sanford Health and Fairview Health Services.
At the federal level, the FTC announced new antitrust merger guidelines in July, which experts say would give regulators additional ammunition to go after cross-market deals.
