As market forces continue to prompt hospitals and health systems to seek business partners, major providers in Boston and Atlanta are each planning separate mergers.
In Boston, Beth Israel Deaconess Medical Center is in merger talks with five-hospital system Lahey Health, according to the Boston Globe. Rising costs and the need for greater fiscal efficiency in delivering care are two reasons the organizations are seeking a partnership.
"You need to have numbers to make changes and have them make a big impact," Lawrence W. Vernaglia, a healthcare lawyer with Foley & Lardner LLP told the Globe. "You need expensive toys to do [it] right--analytics, technology, care teams, telemedicine--a whole arsenal of cool healthcare tricks, and they can't be done by small organizations with small numbers of patients." The newspaper noted that most of the major providers in Massachusetts have either pulled off a merger or sought such a deal in recent years.
In Atlanta, Northside Hospital and Gwinnett Medical Center are engaged in merger talks, the Atlanta Journal-Constitution has reported. If completed, the deal would lead to an integrated three-hospital system with more than 3,500 affiliated physicians. The Journal-Constitution cited the same market forces driving a potential deal in Boston: the need to cut costs and become more efficient in delivering care.
Many experts say the presence of such market forces means that mergers and acquisitions among hospitals will likely continue at a high level for some time to come.
Along with the financial landscape changing in the wake of the Affordable Care Act, some healthcare economists have argued that mergers are necessary to allow hospitals to better manage population health initiatives.
Many deals occur between larger and smaller organizations, but mergers of so-called "equals" also have their benefits, such as providing firmer footing for both organizations during a time of change.