Most hospital mergers aren't anticompetitive, AHA says, but studies link deals to higher prices

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The majority of proposed hospital mergers "present no competitive issues" and positively benefit communities, the American Hospital Association wrote in an Aug. 18 letter to federal officials. However, studies have found hospital and provider consolidation leads to increased prices for healthcare consumers.

Six things to know:

1. In its letter to federal officials, the AHA cited a new study by Charles River Associates that found health systems have been able to lower costs and improve quality through hospital acquisitions. 

2. To arrive at its conclusion, Charles River Associates compared cost per admission, revenue per admission and inpatient quality measures for hospitals that have been acquired to those that have not.

3. The study found acquisitions were associated with a 3.7 percent decrease in net patient revenue per adjusted admission, or about an average $10.7 million annual decline.

"While not a direct measure of negotiated hospital prices, these results suggest that third-party payors appear to benefit from lower prices at acquired hospitals," the study said.

4. Findings from the AHA's study contradict conclusions of other studies that have looked at hospital price and quality measures post-merger. A 2018 study conducted for The New York Times found that prices tend to climb when hospitals consolidate and market competition decreases. Additionally, a 2020 study published in The New England Journal of Medicine found hospital acquisitions led to poorer patient experience and no change in readmission or mortality rates.

5. While the AHA's study didn't find a significant decline in mortality rates post-merger, "because our composite outcome measure of quality — which includes both readmission and mortality rates — continues to reflect a statistically significant improvement in quality, our updated results continue to provide evidence that important indicators of quality of care improve at acquired hospitals post-acquisition," according to the study.

6. The AHA's letter and study come after the Biden administration said in July it wants to strengthen federal review of hosptial deals. AHA's goal is to meet with federal officials to discuss its study results and "share our views about the benefits hospital mergers can have for communities, particularly those hit hard by the ongoing pandemic, as well as the conduct of the commercial health insurance industry and its impact on consumers and providers." 

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