AHA presses for meeting with federal agencies as scrutiny of hospital deals ramps up

M&A concept - M&A word made with wooden blocks on laptop
The American Hospital Association is seeking to head off any new regulations on hospital mergers, asking for a meeting with leaders of the Federal Trade Commission, the Department of Health and Human Services and the Department of Justice. (SB/GettyImages)

The American Hospital Association (AHA) wants to make its case to the Biden administration that hospital mergers are not negatively impacting prices or quality, asking for a meeting with key cabinet members on the issue.

The hospital advocacy group wrote a letter Wednesday to the leaders of the Department of Health and Human Services, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) offering updated industry-funded studies on the impact of mergers. The letter comes more than a month after President Joe Biden signed an executive order calling for the DOJ and the FTC to review merger guidelines for hospitals.

“The fact is that most proposed hospital mergers present no competitive issues and offer real benefits for those communities,” the letter from AHA CEO Rick Pollack said.

AHA updated an earlier study of the impact of mergers on cost, quality and revenue outcomes for 2018 and 2019.

The study, conducted by Charles River Associates and funded by the AHA, found that hospital deals were associated with a “3.3% reduction in annual operating expenses per admission at acquired hospitals.”

Key quality indicators also benefited, including a “statistically significant reduction in inpatient readmission rates and a composite readmission/mortality outcome measure,” the study said. “Mortality rates at acquired hospitals also decline, but not by a statistically significant amount.”

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It also found that revenue per admission at an acquired facility declined compared to non-merging hospitals by nearly 4%.

“These results are suggestive that savings that accrue to merging hospitals are passed on to health plans,” the study said.

The AHA added that more consolidation in rural hospitals helped blunt a wave of closures.

“Nineteen rural hospitals closed their doors last year, but many more might have closed had they not been able to draw on the resources provided by an integrated health system,” the letter said.

The association also sought to turn attention on insurers and their role in antitrust violations.

“While hospital mergers and conduct have received generous amounts of attention from both federal antitrust agencies, that has not so clearly been the case for the commercial health insurance industry,” the letter said.

The DOJ is scrutinizing a major deal for UnitedHealth Group’s Optum to acquire Change Healthcare for $13 billion.

The AHA’s request for a meeting comes as the FTC has ramped up its scrutiny of hospital mergers.

The agency said earlier this month that far too many hospitals mergers have led to “jacked up prices and diminished care for patients most in need.”

The statement was issued after a federal judge halted Hackensack Meridian Health’s bid to acquire Englewood Healthcare Foundation in New Jersey.

FTC scrutiny has scuttled several hospital deals over the past year, including a proposal for Methodist Le Bonheur to buy two Tenet-owned hospitals in the Memphis, Tennessee, area. It was also investigating a doomed merger between Atrium Navicent and Houston Healthcare that collapsed earlier this year.