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The Benefits of Hospital Mergers

By Tom Nickels
November 8, 2017

An article in today’s Politico suggests hospital mergers are having an adverse impact on health local markets and is leading to substandard care and higher prices. But the most recent research on the subject tells a far different and less sensationalist story. A study of recent hospital mergers – those occurring between 2009 and 2014 – shows they result in significant cost savings and quality improvements.

A study by economists at Charles River Associates earlier this year found hospital mergers can result in efficiencies that unleash savings, innovation and quality improvement essential to transforming health care delivery. In fact, the acquired hospitals in the study were actually able to cut annual operating expenses by 2.5 percent – or $5.8 million.

Mergers typically expanded the scope of services available to patients by providing more comprehensive and efficient care. And it was found that mergers do not lead to a spike in revenues that some claim is the motivation for mergers.

Simply put, for health care to flourish in today’s environment – and well into the 21st century – the type of efficiencies that mergers create are often the only means to obtain meaningful cost and quality benefits. Tighter working relationships, much more readily accomplished by full integration through a merger, are the essential building blocks that enable hospitals to cut supply and other costs, gain access to capital and build a lasting culture of teamwork that leads to more efficient delivery of higher quality care.  

That’s why hospitals and health system leaders must consider every possible avenue, including mergers, to give patients the high-quality health care system they deserve.

Topic: Access and Coverage
Tag: mergers

Tom Nickels is the American Hospital Association Executive Vice President of Government Relations and Public Policy.



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