This past September, I wrote an Op-Ed piece for the Des Moines Register and a blog discussing the important drawbacks of the proposed merger between Sanford Health and UnityPoint Health. In early November, this merger was abruptly called off, with the Sanford Health CEO indicating that the UnityPoint board “failed to embrace the vision of a new health system of national prominence.”
For more than three decades, many hospitals around the country have been on one huge shopping spree, buying-up their competitors – both big and small. The common rationale cited by hospital executives (and their powerful associations) are that hospitals will become better health systems, patients will benefit with better quality-of-care, and that costs will go down. In short, they pitch that this buying behavior is a win-win for everyone.
Bottom line – this behavior usually favors the merging hospitals and NOT the payers and patients. It’s quite simple: Hospitals don’t consolidate to cut their prices, they do it to gain market dominance when negotiating with insurance companies. Numerous national studies validate this fact.
New Research on Mergers Refutes Hospital Mergers
A newly-released study, “Changes in Quality of Care after Hospital Mergers and Acquisitions,” published in The New England Journal of Medicine, refutes the too-often-argued pitch that mergers will improve patient outcomes. In fact, this new report suggests four dimensions that run contrary to the hyped-claims offered up by the hospital industry:
- “Acquired hospitals experienced a progressive decline in patient experience measures after the ownership change.”
- Acquiring hospitals with a lower ‘baseline’ of patient experience performance will subsequently spread this lower performance to the newly-acquired hospitals. Additionally, there was no evidence that higher-performing acquiring hospitals will boost the patient experience ratings for the acquired hospitals.
- Insignificant impact on 30-day readmission or mortality rates for the acquired hospitals.
- Any improvement that acquired hospitals had in their clinical process measurement performance happened BEFORE the ownership change, suggesting the acquisition was not a causal reason for the improvement.
- Patient Experience WORSENED.
- Patient Outcomes showed NO IMPROVEMENT.
- Clinical Processes for improved performance are INCONCLUSIVE.
Regardless of the rationale they used, the board of directors at UnityPoint should be commended on nixing the proposed merger with Sanford Health. Having a ‘new health system of national prominence’ sounds like a verse from the P.T. Barnum hymnal of marketing slogans. Without question, healthcare requires less hyperbole-sounding slogans and more patient (and payer) centric action.
If hospitals really desire to lower their prices, they will find ways to eliminate clinical redundancies and increase productivity. This does not require the pursuit of mergers, but rather, demonstrate the willingness to embrace Economics 101 of keeping overhead affordable.
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