A New York Times article earlier this month examined the financial impact of hospital mergers on their patients. In comments to the press and public, hospital CEOs and executives often speak of the benefits a merger will have, including offering quality care to people in areas that were underserved, while lowering costs to the patient because of the continuity in care. A lower cost, streamlined healthcare experience would be the result of fewer medical tests, as well as easy information exchange between physicians of differing specialties through a medical record system. This, hospital executives say, would reduce cost for the patient, while also increasing their ability to do their job and cut back on unnecessary visits, procedures, treatments, and tests, ultimately resulting in less waste.
But data seems to prove that rebranding a hospital actually has the opposite impact on a patient’s wallet, costing patients more through higher insurance premiums, deductibles or other out of pocket expenses.
Data Shows Chicago Hospital Mergers Cost Patients More
Chicago hospital groups have been busy, ranking in the top 3 of hospital acquisitions for at least part of 2017. Here are just some of the acquisitions in Chicago and the surrounding suburbs in the last 20 years:
- Northwestern Medicine + Lake Forest Hospital + Centegra Health System + Cadence Health
- Loyola Medicine + MacNeal Hospital
- University of Chicago Medicine + Ingalls Health System
- Rush University Medical Center + Little Company of Mary Hospital & Health Centers
- NorthShore University Health System + Evanston Northwestern Healthcare + Highland Park Hospital
- Amita Health + Presence Health
The largest of these health systems is Amita, formed in 2015 by merging Adventist Midwest Health & Alexian Brothers Health System. According to a March 2018 press release, Amita is currently the largest non-profit health system in the world.
But is all this joining together forming a monopoly on health care in your area and is it actually good for you? The New York Times conducted an independent analysis of 25 cities who had the highest rate of hospital acquisitions between 2010-2013. The data, analyzed by a team from UC Berkeley, found that in the years following a hospital merger, the cost of care dramatically increased in nearly all of the 25 busiest merger cities. Specifically, the cost of healthcare to you, the patient, went up between 11-54% following an acquisition.
The Chicago Tribune also studied the impact of hospital mergers in October 2017, revealing that hospitals merging together actually cost insurance companies more. Ever a business like any other, insurance companies pass the cost on to those who hold their insurance through:
- higher deductibles
- higher premiums
- higher copays
- higher out of pocket maximums, or by
- offering lesser coverage, or
- forcing employers to pay their workers less to cover increased insurance costs
This begs the question: If insurance companies and hospitals do see reduced costs, will they actually ever pass the savings on to their customers, the patient?
Are Hospital Mergers Legal?
There’s also the legal aspect of it. How are health groups merging legal in areas where they essentially have a monopoly on healthcare? The Federal Trade Commission (FTC) has authority over all mergers, with the ability to block those that are deemed to be “anti-competitive.” However, the FTC hasn’t proven to be totally successful watchdog, at least in Chicago.
In 2007, the federal agency declared NorthShore University HealthSystem’s earlier acquisition of Evanston Northwestern Healthcare and Highland Park Hospital anti-competitive after it became clear that costs were increasing for both patients and insurers. Somehow the system has been able to continue as a combined health group, ultimately agreeing to follow rules set forth by the FTC when negotiating insurance contracts. On the flip side, the FTC was able to block a recent proposed merger between NorthShore and Advocate just last year, arguing that they believed the “merger would increase costs, and harm quality and innovation for patients and their families in the the northern suburbs of Chicago.”
Ultimately, hospital mergers seem to be a double-edge sword, at least in the first few years following an acquisition. There’s no clear data on hospital systems that have merged and have saved patients money by providing the more efficient and cost-effective care that they claim the merger will provide. On the other hand, many patients are receiving care in areas that have been historically underserved. Many patient will also benefit from being able to continue receiving care in their area, with some acquisitions allowing struggling hospitals to keep their doors open. Only time will tell if merger mania is actually good for anyone but the hospitals themselves.
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