“When hospitals and providers are competing against one another and they merge, it allows them to eliminate competition, and it drives up prices.
Every hospital merger case is essentially about health insurance contracting.
With tight margins as the uninsured population grows and uncertainty as healthcare reform approaches, hospitals and physicians groups across the country are seeking merger opportunities.
In 2011, there were 86 hospital merger and acquisition deals, up from 77 in 2010, and 107 physician group merger and acquisition deals, up from 67 in 2010, according to Irving Levin Associates, Inc.
A recent editorial in the Wall Street Journal1 decried hospital mergers, citing concerns that consolidation results in higher prices and less choice for patients.
While Makary, the editorialist and a surgeon, agrees that quality initiatives might be facilitated through consolidation, he cites several recent court cases wherein concerns about monopolistic pricing behavior prevented or modified the terms of several hospital consolidation efforts.
This flurry of mergers marks a momentous occasion as the way healthcare is delivered is changing and hospitals struggle to survive in this competitive market. are reducing unprofitable services while expanding more lucrative lines to help protect margins.
Traditional mergers and acquisitions are expanding health care organizations to offer more services to a broader market.That report examined hospital pricing, competition, and insurance contracts before and after mergers of health care systems across the country, from the takeover of Highland Park Hospital by Evanston Northwestern Healthcare Corp.