In an industry changing at rapid speed, health systems and hospitals are under more pressure than ever to improve quality, lower costs and innovate using the latest technologies. This environment makes hospital consolidation an imminent reality for facilities across the country.
Experts on both sides of the issue weighed the pros and cons of hospital mergers and acquisitions at a PoliticoPro Healthcare Breakfast Briefing Tuesday morning and the financial affect it could have on the healthcare system as a whole.
Martin Gaynor, director of the Bureau of Economics with the Federal Trade Commission, said there are many new ways to align, merge, affiliate or consolidate with other facilities, but his organization grows concerned when it sees a configuration that could hurt competition in an already highly concentrated market, or violate monopoly or antitrust laws.
Healthcare consolidation plays a significant part in the increase in costs in recent years, Barak Richman, a Bartlett professor of law and business administration at Duke University in North Carolina, said during the panel discussion. "The prices are too high because there's not enough competition," he said, adding that there is little evidence to prove consolidated systems produce efficiencies and lower costs.
However, Deborah Zastocki, president of Chilton Medical Center in Pompton Plains, New Jersey and vice president of Atlantic Health System in New Jersey, said she has seen the benefits of alignment, partnerships and acquisition first-hand. Her once independent hospital started a proactive conversation about consolidation years ago, before the financial viability of the stable hospital could be in question.
Now a part of the Atlantic Health System, Chilton has ehealth programs, a patient portal, decreased costs and increased hospital efficiencies. "It's really about raising the bar for everyone," Zastocki said. "The types of things we're able to do really are game-changing."
John Colmers, vice president of healthcare transformation and strategic planning at Johns Hopkins Medicine in Baltimore, called for a change in industry culture and incentives that rewards quality over quantity. He said it's naïve to believe competition from less consolidation alone would be enough to kick-start healthcare innovation and savings.