Partnerships, mergers can save hospitals, AHA says, but some studies link consolidation to higher prices

Mergers, partnerships and acquisitions may have saved some hospitals and allowed them to scale up, an October 2021 American Hospital Association report says. However, other research has found that consolidation actually raises prices and doesn't necessarily increase quality of care.

For the AHA-ordered report by Kaufman Hall, data from 463 transactions between 2015 and 2019 was analyzed, with additional analysis of 266 hospitals involved in those integration transactions. 

The report stated that mergers and acquisitions have saved some health systems and hospitals from closure, easing financial pressure and allowing them to scale up to provide resources and engage in partnerships. It also said that recently acquired hospitals often can expand their offerings and benefit from capital investment to develop new enhancements. The report cited a previous AHA study, which found that in acquired hospitals, revenue per admission declined 3.7 percent compared to non-merging hospitals. It also cited a paper in JAMA that suggested rural hospital mergers may improve care quality.

This research contradicts other studies that have shown that both horizontal and vertical consolidation can drive up prices and premiums. The Kaiser Family Foundation found that there is no clear evidence that acquisitions increase care quality and there is no evidence that nonprofit hospitals provided more community benefits as their share of the market increased. Another study found that prices at acquired out-of-market hospitals increased around 17 percent compared to non-merged hospitals.  

President Joe Biden and federal agencies have also been increasingly concerned about hospital consolidation from an antitrust perspective and are putting more resources into encouraging market competition.

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