Experts question if hospital mergers improve cost, quality

When hospitals merge, their desire to improve the bottom line tends to lead to higher overall costs, reported the Tampa Bay Times. The consensus from a range of healthcare economists is that mergers almost always drive up costs.

"Have you ever seen costs go down in healthcare? Anywhere? For anything?" Glenn Melnick, a health economist at the RAND Corporation, told the newspaper.

Hospitals often are looking for ways to shore up their financials, pointing out the pressures they face from readmission penalties and other components of the Affordable Care Act that could affect their revenues, the article noted.

In the Tampa area, the BayCare Health system is not only acquiring new hospitals, but also is building new facilities, such as office space for the SunCoast Medical Clinic, noted the Times.

Martin Gaynor, a healthcare economist at Carnegie Mellon University, said a merger typically drives up costs about 20 percent on average, according to the Times. That's despite any cost savings being realized by economies of scale.

Hospital mergers themselves also are drawing greater scrutiny from the Federal Trade Commission, according to California HealthLine. "If you want to do something about controlling costs in healthcare, you have to challenge anticompetitive hospital mergers," FTC Chairman Jon Leibowitz told California Healthline.

Although the economists interviewed by the Times expressed doubt that mergers can improve the quality of care a patient receives, Dan West, chairman of the department of health administration at Scranton University in Pennsylvania believes consolidation in the Keystone State has driven healthcare quality upward.

"There has been a tendency for people to say they needed to go to New York and Philadelphia for healthcare," West told the Scranton Times-Tribune. "I think there is evidence that people now leave for reasons they don't have to."

For more information:
- read the Tampa Bay Times article
- read the California HealthLlne article
- here's the Scranton Times-Tribune article

Suggested Articles

States that spend more on primary care have better outcomes, including fewer hospitalizations and emergency department visits, says a new study.

Technology company Philips has acquired Boston-based startup Medumo, the developer of patient navigation and engagement solutions.

UnitedHealth Group earned $4.7 billion in profit in the second quarter of 2019, with earnings increasing year over year by $540 million, or 12%.