Despite a nationwide dip in healthcare mergers and acquisitions (M&A), many systems continue to seek deals to acquire physician practices in an effort to expand access to care as well as their market reach.
Historically, many of these deals don't work, and a new Becker's Hospital Review article reveals that part of the problem may be due to the fact that healthcare systems focus on the external aspects of a merger and not the internal ones.
Instead of integrated systems, in many cases, healthcare systems become random collections of hospitals and physician groups, Igor Belokrinitsky, a partner with Strategy&, told Becker's. "A lot of systems, the large ones with capabilities to do M&A, are saying, 'Hold on. Before I keep getting bigger, am I functioning?'" Belokrinitsky said.
Paul Levy, former president and CEO of Beth Israel Deaconess Medical Center in Boston, told the publication that part of the problem is that healthcare leaders often don't develop specific measures to determine whether their integration efforts work.
"In theory, you should therefore have a number of metrics by which you'd judge your success," Levy told Becker's. "Particularly for nonprofits, you'd think they'd make those metrics available to their community to see how it's going, but they generally do not."
And even if a system does manage to fully integrate hospitals and practices, there is growing concern that some physician group acquisitions may violate anti-trust laws. Earlier this year a federal judge ruled that St. Luke's Health System in Idaho violated antitrust laws when it purchased the state's largest independent physician's practice, calling into question future acquisitions.
The judge ordered St. Luke's the dissolve the partnership, but the system is appealing the decision. Meanwhile, the Idaho Statesman reports that St. Alphonsus--the system's largest competitor--recently told a federal judge that its business from a physician's group slowed down after St. Luke's purchased the group.
Saint Alphonsus Health System was one of several entitites to sue St. Luke's, arguing that the deal would reduce competition for primary care in the Nampa area because doctors from the Saltzer Medical Group would refer patients to St. Luke's instead of Saint Alphonsus.
Although St. Luke's denied those claims, St. Alphonsus said in court documents filed Friday that referrals from Saltzer dropped 55 percent since St. Luke's took over the medical practice at the end of 2012.
"I am unaware of any events that could have caused this decline other than decisions or referrals by the Saltzer physicians, their staffs or other St. Luke's personnel," wrote Lannie Checketts, chief financial officer of Saint Alphonsus Medical Center-Nampa, in the court documents.
St. Luke's, meanwhile, claims Saint Alphonsus exaggerated the numbers, according to a follow-up article in the Idaho Statesman.
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