There’s a concerning trend happening across the country, including right here in North Carolina, that involves hospitals and entire healthcare systems joining forces to produce one massive conglomerate.
While it might seem like combining strengths would be positive for consumers, data shows that the opposite usually occurs.
A 2018 study by Harvard University, Harvard Business School, and Columbia University found that “hospitals acquiring another system member in-state raise price by 7-10 percent.” Worse, other studies say that 10% may be putting it lightly, citing consolidation of two hospitals closely linked in proximity as the cause for price increases of 40% or more.
The reason for the price hikes is because there is no competition.
Hospital mergers are also likely to cause a degradation in the quality of care a patient receives. For example, studies have shown higher competition is associated with a faster decrease in 30-day acute myocardial infarction mortality. Another study uncovered heart attack mortality dipped nearly 11 percent in markets that had hospital competition versus those that didn’t.
Why the push for mergers and acquisitions in the first place?
It’s probably obvious what’s in it for the healthcare companies interested in aligning with others: more money. When CVS agreed to buy Aetna for $69 billion, the deal benefited both companies greatly, creating fresh revenue streams for each.
Hospitals consolidating to create mega-systems can also use their monopoly power to demand higher payments from your insurer, which increases the premiums you pay.
Mergers and acquisitions in North Carolina
The Tar Heel State is not immune to the healthcare mergers and acquisitions boom.
New Hanover Regional Medical Center, the largest county-owned hospital in the state, is being sold to the health care giant Novant.
Greensboro-based Cone Health is hoping to merge with Sentara Healthcare of Virginia. If approved and finalized, that deal would create a combined organization that encompasses 17 different hospitals, including Cone’s five in and around Greensboro.
And just recently, UNC Healthcare and Atrium attempted to merge – a deal that was thankfully called off.
All data shows that mergers between health care providers cause prices to go up and quality to go down.