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Why Hospital Mergers are Different

By Melinda Reid Hatton
August 3, 2015

The difference between hospital and commercial insurance consolidation is in the primary motivation and the benefits for patients. Mergers enable hospitals to provide patients with what they want and demand – care that is better managed, more coordinated and focused on keeping them well. 

Hospitals merge in order to build a better more durable continuum of care for patients.  Mergers enable many hospitals to provide patients with integrated clinical arrangements to replace uncoordinated episodic care.  And they often keep the doors of financially failing institutions open, providing medical access to patients in communities that might otherwise lose it.

Despite fears that hospital mergers would raise prices hospital price growth is at an historic low, down to 1.4 percent in 2014 from 2.2 percent in 2013 – the slowest rate since 1998.  The recently announced deals involving four of the five largest commercial health insurers are a different kettle of fish.  Insurers, not patients, will be the primary beneficiaries if these deals are approved.  By acquiring their rivals they avoid competing it out for subscribers by offering them lower prices, greater options or more flexibility.  The motivation behind insurance consolidation is quite different.

Hospital realignment is essential to providing patients with high-quality, well-coordinated care, and it’s contributing to lower cost growth.  The health insurance world is already highly consolidated, and we believe that these acquisitions will not benefit patients.



Topics: Access and Coverage, Advocacy and Public Policy
Tags: acquisitions, consolidation, mergers, Coverage, access, clinical integration, care coordination, antitrust

Melinda (Mindy) Reid Hatton is the General Counsel and Senior Vice President at the American Hospital Association.

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