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Whither the hospital merger wave?

Herewith a review of the continuing wave of hospital mergers, which, of course, raises serious concerns about competition, or the lack thereof, and  thus huge systems’ pricing power.

Consider that just last week,  Tenet Healthcare announced the sale of three acute- care hospitals to HCA Holdings and Community Health Systems completed the sale of nine hospitals.

And as Healthcare Dive notes: “While some industry experts have posited actionable items to enhance competition, a flurry of regulatory actions and regional influences could increase consolidation even more, leading to even less competition.”

“Rising expenses and declining admissions alongside flattening reimbursements – as well as alternative care settings competing for the one-and-done low acuity patient visits – make for an unfortunate financial reality for some hospitals. Some have found it best to put up a ‘For Sale’ sign.”

“Healthcare and hospital prices will ascend to the level a market can take on. If a provider has a large monopoly in a market/region, prices can actually rise to offset rising expenses and declining patient volume since they have greater power at the negotiating table over insurers.”

Meanwhile, the publication said,  Martin Gaynor, Farzad Mostashari and Paul B. Ginsburg  recently advanced, in a Brookings Institution report, some suggestions on how to encourage competition in the industry, including, in Healthcare Dive’s shorthand:

  • “Increasing scrutiny on mergers.
  • “Stop paying more for the same outpatient services.
  • “Encouraging provider competition.
  • “Improving transparency.
  • “Ending anti-competitive practices, such as anti-tiering and anti-steering.
  • “Allowing lower-risk Medicare ACO contract options for independent provider groups.”

To read the Healthcare Dive report, please hit this link.

To read the Brookings report, please hit this link.


FTC puts W.Va. hospital-merger challenge on hold


Cabell Huntington Hospital.

The Federal Trade Commission will put its challenge of a West Virginia hospital merger on hold while it studies a new state law meant to protect the deal from federal antitrust scrutiny.

The FTC’s order  delays for 30 days administrative law proceedings over Cabell Huntington Hospital’s proposed acquisition of St. Mary’s Medical Center, also  in Huntington.

Modern Healthcare reported: “The order follows the recent signing of a new West Virginia law  designed to shield hospital mergers from state and federal antitrust review, assuming they get certain other state approvals. Some speculated the new law would cause the FTC to drop its challenge to the West Virginia merger all together, and that the new law could inspire more states to pass similar legislation. ”

“Withdrawing this matter from adjudication for a short period of time…will give us an opportunity to evaluate the impact, if any, of the state legislation without any adverse effects on competition or consumer interests,”  the agency said.

The publication reported that the FTC had said previously that the takeover would create a near-monopoly over acute-care inpatient hospital services and outpatient surgical services that would likely lead to higher prices and lower quality. Modern Healthcare said that the “two hospitals’ leaders have said they believe the FTC challenge ‘misreads the highly competitive landscape’ across their three-state market of Kentucky, Ohio and West Virginia” and that the merger would help the community.

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