Hospital mergers trendy but offer few benefits

Despite the trend of hospital mergers and acquisitions, new research from the U.K. indicates that mergers are not the most effective way to handle hospitals that are performing poorly in quality or costs, according to public service researcher Centre for Market and Public Organisation.

Researchers from the University of Bristol found that hospital consolidation (involving half of the acute hospitals in England) in the late 1990s and early 2000s brought few benefits. In fact, hospitals continued to have larger deficits after mergers, according to a Wednesday press release. Patients had to wait longer for elective treatment post-merger, and there were few indications that clinical quality improved. Even more, there was no increase in activity per staff member employed in merged hospitals, as hospital admissions fell by around 10 percent four years after hospitals merged, the press release stated.

In the United States, 78 percent of surveyed organizations are exploring or have M&A deals under way, according to a new HealthLeaders Media report. Sixty-five percent use M&As to strengthen existing markets, while 43 percent want to expand into new markets. Fifty-two percent of them said they are using the strategy to acquire physician practices to strengthen current services, and 37 percent reported pursuing new service lines through practice acquisition. More than half (56 percent) said their organizations have specific teams dedicated to hospital-physician practice acquisition opportunities.

However, more than a fifth of respondents do not have plans for mergers.

"What really struck me is that 21% have nothing planned for M&A," report advisor Kevin Gross, president of Ardent Health Services, Oklahoma division and CEO of Hillcrest HealthCare System, said in a press release today. "That probably reflects uncertainty. It's a difficult time."

For more information:
- read the U of Bristol press release
- check out the report (.pdf)
- read the HealthLeaders press release
- see the HealthLeaders report (.pdf)

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Payer-provider M&A roundup: The biggest deals of 2011
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