HFMA: Mergers will significantly impact care delivery system

Ongoing “merger-mania” in the healthcare industry will have significant impacts on the future of the delivery system, according to a recent report.

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Ongoing “merger mania” in the industry will have a significant impact on the future of the healthcare delivery system, according to a recent report.

The Healthcare Financial Management Association (HFMA) released the third in a series of four reports that are meant to guide healthcare organizations in future strategic planning efforts. Industry leaders have their work ahead of them to prove that continued consolidation is beneficial to consumers, according to the report (PDF).

"Consolidation is a trend that's here to stay," HFMA President and CEO Joseph J. Fifer said in a post announcing the report’s release. "But controversy about the impact is ongoing. In many cases, consolidated entities have not demonstrated value to the communities served. Across the industry, the challenge going forward is to achieve and demonstrate higher value from consolidation by lowering the total cost of care and improving quality."

Research shows that mergers negatively impact competition and care access for some consumers, and may lead to significant price hikes in some markets. But industry leaders who favor consolidation say the opposite, arguing that mergers increase efficiency and therefore cut costs.

The report notes several organizations to watch as the situation continues to unfold, like Geisinger Health System, which acquired AtlantiCare in 2015, and the proposed alignment between Catholic Health Initiatives and Dignity Health, as their moves may be key in devising alignment strategies.

Other key takeaways from the report include:

  • Small, independent physician practices are becoming less and less common, which can be attributed to an industry-wide move away from volume to value-based care.
  • Even if current insurance mergers, like those between Anthem and Cigna and Aetna and Humana, fail to close, expect payers to remain highly consolidated for the future.
  • Post-acute facilities are also consolidating frequently, though hospitals and health networks are rarely the buyers in those deals.
  • Though it has been dealt some setbacks, the Federal Trade Commission is likely to continue to monitor potential mergers very closely.
  • Even if consolidation does not improve value for patients, emphasis on price transparency and the growth of value-based care may convince aligning organizations to pass their savings on to the consumer.