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What does consolidation mean for the future of healthcare?: 6 things to know

The trend of hospital and health system consolidation will continue to mount in the coming years, but it is unclear if this changing healthcare landscape will improve value for consumers, according to a new report published by the Healthcare Financial Management Association.

The report, Health Care 2020: Consolidation, explores the potential influence consolidation will have on healthcare over the next several years, including the outlook for hospitals and health systems, physician practices and health plans. The report also examines antitrust enforcement and whether mergers and acquisitions can translate into value for the consumer instead of merely for the consolidating entities. Eleven healthcare policy experts were interviewed for the report.

"Consolidation is a trend that's here to stay," HFMA President and CEO Joseph J. Fifer said in a news release. "But controversy about the impact is ongoing. In many cases, consolidated entities have not demonstrated value to the communities served. Across the industry, the challenge going forward is to achieve and demonstrate higher value from consolidation by lowering the total cost of care and improving quality."

Here are six things to know from the report.

1. Continued hospital and health system consolidation is poised to remake the delivery system landscape over the next 10 years.

2. Small, independent physician practices are becoming less prevalent as healthcare's transition from fee-for-service to value-based care gains steam.

3. The health insurance sector is expected to remain highly consolidated for the foreseeable future, no matter the decision on proposed mergers between four of the five largest health insurers.

4. Post-acute facilities are consolidating. However, hospitals and health systems are generally not the buyers in the foreseeable future. "We're not seeing hospitals buy up post-acute centers, good, bad, or indifferent," Paul Liistro, managing partner of Manchester Manor Health Care Center and Vernon Manor Health Center in Connecticut, said in the report. "What we are seeing is ACOs, especially those that are involved in shared savings programs, partnering with high-performing facilities, setting objectives, and working with the facilities diligently to improve clinical pathways for certain conditions."

5. Although rulings at the district court level earlier this year dealt the Federal Trade Commission some temporary setbacks, reversals by appellate courts mean the federal agency is likely to keep a close eye on proposed health system mergers.

6. While hospital consolidation has not historically increased value for consumers, emerging value-based payment systems and an increased emphasis on price transparency may motivate merging organizations to pass along their savings.


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