Among other problems with for-profit health systems is that even when they work today, tomorrow is not likely to bode well for patients. The good hospitals that spend money to deliver high-value care and still succeed financially are a smart investment for the predator companies that acquire them, knowing they can profit big time off of them. Not surprisingly, big hospital systems are buying up public hospitals.
Of course, the bigger the hospital systems, the greater the power they have over costs. We have seen many hospital mergers and acquisitions in the last couple of decades. The evidence is clear that these mergers drive up costs; we lack the evidence to confirm whether they drive down quality.
Jordan Rau of Kaiser Health News reports that one of North Carolina’s biggest hospital systems is buying New Hanover Regional Medical Center. New Hanover is a public hospital that is known for its high value care and good balance sheet. Odds are high that this purchase will drive up hospital prices as well as health insurance premiums for people in the area.
The state’s attorney general has the sole authority to approve the sale. One retired businessman nailed the likely consequences: “We project the prices will go up, they’ll probably lay off employees after a couple of years, and the hospital will decline in terms of its quality. . . . A very large percentage of mergers and acquisitions, like 90%, never succeed in fulfilling their initial goals.”
To be clear, the local government is making a lot of money off the sale. And, it could use the money to benefit the community in other ways. But, it won’t be able to control hospital prices.
There are now just 965 public hospitals owned by local governments out of 5,198, hospitals in the country. In the last ten years, there are four percent fewer hospitals and 14 percent fewer government-owned hospitals. There has been tremendous consolidation in the hospital industry.
The overwhelming majority of hospitals wield enormous power over their communities and the health insurers in those communities. As of 2017, only one in ten hospital markets were not “highly concentrated.” Two separate studies show that patients and insurers tend to pay seven to 12 percent more in markets that are highly concentrated.
Here’s more from Just Care:
- Are hospitals posting their prices, as required?
- Coronavirus: Medicare covers hospital care at home
- Coronavirus: Hospitals sue patients to collect payment
- Traditional Medicare offers better home care benefits than Medicare Advantage
- Medicare Advantage: Will you get care from the doctors you want to see at a price you can afford?
