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Letter to the Editor

Article on Hospital Consolidation Misleads

Melinda Hatton

A recent article in P&T (by Stephen Barlas, May 2019) misses the mark in its criticism of hospital mergers. Recycling studies that are old and otherwise unreliable,1 the article paints an erroneous picture of the impact of hospital mergers on quality, access, efficiency, and innovation, among other benefits, for the communities they serve. The fact is that hospital and health system mergers are creating coordinated systems of care for patients to lead the way on value-based care.

For example, a 2017 study2 from Charles River Associates confirmed that:

  • Mergers decrease costs due to economies of scale, reduced capital costs, and clinical standardization, among other efficiencies. An empirical analysis showed a 2.5 percent reduction—equating to $5.8 million—in annual operating expenses at acquired hospitals. In a 2018 update3 to the study, Charles River Associates found that acquisitions of nearby hospitals resulted in larger cost decreases than acquisitions of more distant hospitals.
  • Mergers have the potential to drive quality improvements through the standardization of clinical protocols, as well as investments to upgrade facilities and services at acquired hospitals.
  • Mergers typically expand the scope of services available to patients, and build upon existing institutional strengths to provide more comprehensive and efficient care.

In the rapidly changing health care environment, building coordinated systems of care through organic growth and mergers is essential for providing value-based care to entire communities with diverse needs and expectations.

Author bio: 
American Hospital Association General Counsel

References

  1. Cooper Z, Craig S, Gaynor M, et al. Hospital Prices Grew Substantially Faster Than Physician Prices for Hospital-Based Care in 2007–14. Health Affairs 2019;38;(2):
  2. Noether M, May S. Hospital Merger Benefits: Views From Hospital Leaders and Econometric Analysis. Charles River Associates January 2017;
  3. Noether M, May S. Hospital Merger Benefits, a Review and Extension American Hospital Association. December 2018;