HHS: Urban and low-profit hospitals more likely to be sold over last 6 years

Hospitals in urban areas and with lower profit margins were more likely to be sold over the past six years, new federal data show.

The Department of Health and Human Services (HHS) released an analysis of (PDF) hospital and nursing home mergers and acquisitions from 2016 through 2022. The agency also released raw data on changes of ownership for nursing homes and hospitals, as scrutiny intensifies on the impact of hospital mergers on cost and quality.

“Hospital and nursing facility consolidation leaves many underserved areas with inadequate and more expensive healthcare options,” said Chiquita Brooks-LaSure, administrator of the Centers for Medicare & Medicaid Services.

Across the country, 4.6% of hospitals were sold over the six years examined, according to an analysis from HHS’ Assistant Secretary for Planning and Evaluation.

But the rate at which hospitals were sold varied considerably by state. For instance, South Carolina had the highest rate of ownership changes with 14 out of its 73 facilities changing hands.

“Kentucky, New Jersey and Connecticut also had rates above 10%,” the analysis said. “A majority of states had rates of 4% or lower.”

HHS explored what types of hospitals were more likely to change ownership as well.

Only 0.8% of smaller facilities with 25 or fewer beds were sold compared with medium and larger facilities. 

Hospitals located in more urban areas were also far more likely to be sold, with 5.6% of such facilities being sold compared to 3.3% of rural facilities. 

“Hospitals with the lowest profit margins (negative 2% or worse) were sold most often, more than twice as often as those with the highest profit margins (8.3% vs. 3.0%),” the report added. 

There were also major differences in the types of hospitals that were more likely to be bought. Long-term care facilities were sold at much higher rates than other hospitals. However, only one out of 1,330 critical access hospitals were sold. More than 30 critical access hospitals closed over the past two decades.

The agency found nursing homes were far more likely to change hands than hospitals were over the past six years. From 2016 to 2021, there were 348 hospitals and 3,236 skilled nursing facilities that were sold. 

HHS’ report and release of new data comes as scrutiny over hospital deals has heated up. 

The Federal Trade Commission (FTC) has attempted over the past two years to block several major hospital mergers over fears the combined system would raise prices on patients and reduce quality. A deal between Hackensack Meridien and Englewood Health fell apart after the FTC moved to block it.

President Joe Biden also signed an executive order last year that called for federal agencies to review and revise hospital merger guidelines to ensure patients aren’t harmed by the deals.