AHA Makes the Case for Hospital Consolidation, But the Facts Are the Facts

Hospital mergers benefit patients and communities, according to a study commissioned by the American Hospital Association (AHA).

But was the study necessary at all? In the introduction, the AHA presents a key fact behind hospital mergers that refutes critics who believe such mergers fuel monopolies and drive up healthcare prices:

Facts: Nearly all hospital transactions have to be reported to the Federal Trade Commission and the Department of Justice’s Antitrust Division for scrutiny. Even for those that do not have to be reported, typically because they are smaller transactions, FTC, DOJ, and the state Attorneys General have the opportunity to (and often do) investigate if they believe the transaction raises competitive concerns.

If the federal and state governments are investigating hospital acquisitions and mergers for monopolies, why the fuss? Apparently there are people out there who don’t believe their government is working in the best interest, hence the AHA-sponsored research.

The study found that 10 percent of hospitals in the United States were involved in a merger or acquisition between 2007 and 2012, and that most of those transactions were between two hospitals. In those circumstances where the merging hospital’s service areas overlapped or competed, nine out of 10 were in areas where there were five or more competitors. Only 20 of the mergers/acquisitions occurred in areas with fewer than five hospitals, and the study takes great pains to explain the extenuating circumstances behind each one.

NEW REPORT ON HOSPITAL MERGERS AND ACQUISITIONS SHOWS THE BENEFIT TO PATIENTS AND COMMUNITIES

WASHINGTON (June 3, 2013) – Only a small fraction of hospitals have been involved in a transaction such as a merger or acquisition between 2007-2012, according to a new report from the American Hospital Association (AHA) and the Center for Healthcare Economics and Policy. The report highlights how these transactions benefitted patients and the community by retaining vital services.

About 10 percent of community hospitals, or 551 hospitals, have been part of a merger or acquisition, and the number of hospitals involved in any one of these transactions has been modest. The average number of hospitals acquired in a given transaction was between one and two.

“Hospitals are responding to the call for better coordinated, high-quality care by moving away from a structurally fragmented care system. They are meeting that expectation by building a continuum of care that involves physicians and other caregivers to improve patient care,” said AHA President and CEO Rich Umbdenstock. “Hospitals are collaborating with others ultimately to benefit the patients and communities that hospitals serve.”

The report found that the vast majority of mergers and acquisitions involved expansion into new areas or occurred in areas where there were more than five hospitals, ensuring that patients had alternative sources of care. In areas where there were fewer than five hospitals, the mergers or acquisitions provided tangible benefits to the community. Larger hospitals in these areas were

also able to provide greater benefits such as access to better technologies and expanded services or retaining employees.