Big hospitals keep getting bigger. But, contrary to what the suit-wearing MBAs may claim, the rising number of institutional mergers and acquisitions isn’t necessarily better for patients and their care.
At hospitals subjected to corporate wheeling and dealing, the quality of care got worse, or, at best, it stayed the same and didn’t improve, a new study in the New England Journal of Medicine reported.
Researchers scrutinized federal data “from 2007 through 2016 on performance on four measures of quality of care … and data on hospital mergers and acquisitions occurring from 2009 through 2013,” they said. These measures, the Wall Street Journal reported, included: patient satisfaction; deaths within a month of entering the hospital; return trips to the hospital within a month of leaving; and how often some heart, pneumonia, and surgery patients got recommended care. They looked at 246 hospitals involved in M&A activity, controlling their findings with data from 1,986 institutions not similarly affected.
As Nancy Beaulieu, a Harvard University research associate and lead study author, told the newspaper: “Quality [of care] didn’t improve.”
That undercuts an oft-cited reason why hospitals engage in mergers or acquisitions — their claim that they can achieve efficiencies and economies of scale by getting bigger. The American Hospital Association disputed the new study’s results and similar findings, citing a private study the trade group funded.
But the Wall Street Journal quoted independent sources that praised the new research. They said it will provide rigorous information that regulators, politicians, and patient safety advocates may cite as they battle hospitals’ seemingly relentless march to grow and dominate markets in which they may previously had to compete.
Becker’s, an industry publication, reported that hospital M&A activity hit a record in 2018. KaufmanHall, a consulting firm that monitors the industry, reported that, as of the third quarter of 2019, “with 71 announced transactions … 2019 [was] running slightly ahead of 2018, which had 68 announced transactions through Q3.” Washington, D.C. — with a market already marked by considerable consolidation of hospital ownership — saw its own share of the activity, with Adventist Health Care and Howard University talking about a deal last summer.
Here’s the crucial takeaway for patients, however, as the Wall Street Journal reported:
“Prior studies have found higher prices follow mergers. Prices increased 6% after nearby hospitals merged, according to one analysis published by the Quarterly Journal of Economics in 2018.”
Though politicians — particularly 2020 presidential candidates, it seems — have obsessed about health insurance and the role it plays in health care costs, prices of medical services are a real and present nightmare for patients. And hospitals are a top driver of these indecipherable and murky costs, amounting to an estimated $1 trillion.
When they become behemoths, their political powers and influence increase on a spectrum of issues, not the least because they employ ever-increasing numbers of Americans (with outsized increases in jobs in billing and administration, not in direct care positions). This makes it a problem to rein in possibly predatory pricing.
Research also has shown that hospital suits, particularly if they own a market, too readily increase prices in arbitrary fashion, “spit balling” the costs of treatments and services in a fashion that would make the greasy mechanic on the corner envious.
It also almost goes without saying that, with rare exception, American consumers — much less when they are patients — don’t find themselves well cared for by corporate goliaths focused on maximizing their market share and bottom lines.
In my practice, I see the harms that patients suffer while seeking medical services, especially in hospitals, large and small. The health care system already is wracked with medical error. But hospital care itself is fraught with preventable harms and deaths. Misdiagnoses also occur with unacceptable frequency.
Yes, doctors and hospitals — many of which provide excellent care — should be allowed a reasonable return on the resources, experience, and skills they apply to change and save lives. But hospitals getting bigger just so they can enrich their bosses and a plutocratic few, while seeing the quality of care and safety for patients dive, well, that’s not only not good but something to be stopped.
Health insurance is a vital concern. But voters may wish to apply a laser-like focus in this presidential election year, too, to health care prices and costs — especially with hospitals and Big Pharma. We’ve got a lot of work to do to ensure that health care is a right, not a privilege, and that it stays as accessible, affordable, safe, and efficient as possible.