Post-ACA, "non-merger-mergers" pick up steam

Strategic alliances between hospitals are now more popular than mergers, California HealthLine reports.

For example, according to the article, California's Dignity Health, which includes about 40 hospitals, last week agreed to an Arizona-based joint venture with Tenet and Ascension Health, the latest in a series of what Healthline calls "non-merger-mergers."

"I think 'alliances' is the right word" for the arrangements, American Hospital Association General Counsel Melinda Hatton told Healthline. "And they're all related to market forces, some of which are attributable to the Affordable Care Act (ACA)."

Healthcare M&A activity has sharply increased since the ACA's passage, with more than twice as many deals in 2012 as 2009. There are numerous possible reasons for this, including the ACA's incentives to provide more efficient, high-quality care and a desire for security as the economy continues to slowly recover from the recession.

However, the Federal Trade Commission (FTC) has also increased its scrutiny on how these deals may affect market competition, as in its fight with St. Luke's Health System over its acquisition of Saltzer Medical Group. But Martin Gaynor, director of the FTC's Bureau of Economics said that the FTC has only scrutinized a handful of recent deals.

The FTC scrutiny is one reason for the increase in partnerships that don't involve the legal implications of shared ownership, according to the article. In addition to its arrangement with Dignity, Tenet recently collaborated with Yale New Haven to look into building clinical networks in the Northeast. Despite the fact that Yale is a regional medical center and Tenet is a national, for-profit hospital system, the organizations said their different natures mean Yale provides clinical expertise while Tenet's financial reserves help with potential acquisitions.

Similar academic medical centers/for-profit joint ventures have been established in Ohio (between Cleveland Clinic and Community Health Systems) and North Carolina (between Duke and LifePoint), according to the article.

To learn more:
- read the California HealthLine article