Have hospital mergers gone too far?

Determining if hospital mergers are beneficial is still up for debate. Experts, for example, argue whether healthcare acquisitions in Massachusetts, a hotbed for recent consolidation, ultimately will help patients and the involved hospitals.

"The pendulum had swung too far to independents before, and fragmentation," Mass. Council of Community Hospitals Executive Director Donald Thieme said in a Taunton Daily Gazette article. "Now the pendulum is swinging the other way. The question is if it swings too far."

Healthcare mergers and acquisitions are certainly trendy, rising in 2011 with 980 deals worth $227.4 billion, according to Irving Levin Associates. In Massachusetts, for example, Beth Israel Deaconess Medical Center took over Milton Hospital. Northeast Health System announced merger plans with Lahey Clinic in Burlington, and Steward Health Care System added four more hospitals to its collection.

The consolidation movement could have some lasting effects.

"That (consolidation) trend is aggressive and irreversible," Massachusetts Hospital Association President and CEO Lynn Nicholas said. "Because of our tight geography, we will be much more consolidated in the future than we are now."

Although some nonprofits say they will remain independent, some community hospitals can benefit in the mergers with shared resources and more coordinated care.

"People aren't exactly speed dating, but I do think that some community hospitals feel somewhat of an urgency to identify the right partners for them to move forward in the new environment," Nicholas said.

However, Nicholas also noted that other parts of the country are far more consolidated than Massachusetts.

A recent PricewaterhouseCoopers report warned that consolidation isn't necessarily good business for everyone. In fact, two-thirds of deals do not meet expectations because of overpaying, culture clashes, failure to retain key employees and ineffective communication, among other concerns. The report indicated that mergers, even small ones, carry considerable risk.

For more information:
- read the Taunton Daily Gazette article
- see the Irving Levin Associates announcement
- check out the PricewaterhouseCoopers report (subscription required)

Related Articles:
Mergers of Catholic, secular hospitals creating conflicts
Hospital mergers not for everyone
Local hospitals struggle with larger out-of-town competition
New Jersey a hotbed for hospital consolidation
Independent hospitals fight consolidation trend
Healthcare M&A finishes healthy in 2011

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