Hospital mergers in NY area could drive up costs

Hospital mergers and acquisitions are on the rise in New York state and vicinity, causing concern that prices for services could soon increase as well, the Wall Street Journal reported.

At least a dozen hospitals in the Empire State have merged or affliliated with larger systems since 2011, with a similar number of mergers or affiliations occurring in New Jersey, according to the WSJ. "The most dangerous place to be these days is a stand-alone hospital," Michael Dowling, president and chief executive officer of North Shore-LIJ Health System, told the newspaper.

Among the recent deals are the Mount Sinai Health System acquiring five hospitals formerly owned by Continuum Health, along with Prime Healthcare Services acquiring St. Mary's Hospital in Passaic, New Jersey. Although Mount Sinai officials say they hope to cut at least $100 million in costs from the Continuum facilities, Paul Ginsburg, CEO of the Center for Studying Health System Change in the District of Columbia, concluded that merged entities have fewer incentives to keep prices down.

There is "less motivation to keep costs down, less motivation to work on improving quality," Ginsburg told the WSJ. Among the reasons: The patients added by such deals give the hospitals more bargaining power with commercial payers.

A study published in Health Affairs earlier this year demonstrated that when hospitals purchased physician practices, the fees charged by doctors rose.

Some areas of New York have considerably lower prices than other parts of the country. In the Buffalo area, for instance, so-called retail prices for the five most common charges are lower than other areas of the U.S., according to an analysis by the Buffalo News. Hip surgeries, for example, averaged $29,534 in 2012, well below the national average of $52,236, although total payments to the hospitals were on the high side.

But Michael Maron, CEO of Holy Name Medical Center in Teaneck, New Jersey, suggested that consolidation does not always benefit hospital operators. "The bigger you are, the harder it is to maneuver and make change," he told the WStJ. "Are you going to forfeit all these operating principles that have become important to the people that you serve--just to get bigger?"

To learn more:
- read the WSJ article
- here's the Buffalo News article

Suggested Articles

Employers are making adjustments to their health benefits in the wake of COVID-19, but workers may not take the time to consider these new options.

Here's why analysts and industry leaders think the Teladoc-Livongo deal could significantly change the virtual care market and healthcare delivery.

Oak Street Health officially went pubilc on Thursday with a $328 million initial public offering.