After a frenzied week of large-scale merger announcements between hospital systems across the nation, experts are left wondering: will these tie-ups transform American healthcare for the better, or stick patients with a higher bill?
St. Louis-based Ascension Health and Renton, Wash.-based Providence St. Joseph Health are rumored to be mulling a merger that would create the nation's largest hospital system, according to a report by the Wall Street Journal. Meanwhile, Catholic Health Initiatives and Dignity Health, in a long-awaited announcement, said last week they have signed an agreement to merge, creating a giant system with 139 hospitals and $28.4 billion in revenue.
That news came just days after Advocate Health Care and Aurora Health Care said they would merge in a $10.7 billion deal.
But as health systems combine in a bid to gain more leverage over insurers as health plans aim to keep patients away from the emergency room and inpatient wing, it's unclear if patients stand to benefit from the mergers.
Merging hospitals typically claim they will lower costs by increasing efficiency. But Ascension and Providence "are already two really big systems," said Jonathan Grossman, a partner in the law firm Cozen O'Connor's antitrust group. "How much more efficiencies are there to be gained?"
An Ascension-Providence deal, though not yet confirmed by the health systems, would put the combined company ahead of HCA, which has 177 hospitals and reported $41.5 billion in 2016, according to Modern Healthcare data. Because Ascension and Providence are both Catholic hospital chains, the deal must be approved by church authorities as well as regulators.
Ascension and Providence declined to comment on the rumored merger.
Hospitals are under increasing pressure to merge as inpatient revenue slows to a crawl and expenses related to personnel and technology balloon. Patients, increasingly sensitive to cost, are opting to get more of their care outside of hospitals, and improved technology is helping them do so. That, plus insurers' push for more outpatient care in cheaper settings, puts hospitals' bottom lines in jeopardy, especially if they rely heavily on revenue from inpatient care.
In recent years, there's been an uptick in the number of deals, including mergers, acquisitions, joint ventures or joint operating agreements, struck between hospitals and health systems.
At the end of the third quarter of 2017, hospitals and health systems had struck 87 deals, putting this year's transactions on a path to outpace last year's 102 deals, according to consultancy Kaufman Hall, which tracks provider mergers. Eight deals struck this year were between companies with nearly $1 billion or more in revenue, compared with just four in 2016.