Are health system mergers good for healthcare systems and hospitals, or a case of careful what you wish for? Depends on who you ask, but they are continuing a rapid pace in 2018 just like the past 2-3 years, a trend we have been covering.
WhyY.org is reporting that “Philadelphia hospital networks Jefferson Health and Einstein Healthcare Network might be joining forces after signing a letter of intent to explore the possibility of a merger. Jefferson Health CEO, Stephen Klasko, said that “merging with Einstein, based in North Philadelphia, will allow Jefferson to expand its care for the underserved. Einstein will also become the hospital’s biggest academic partner, making its residency program one of the largest in the country, with about 2,200 residents.” This WhyY article goes on to explore merger motivation, observing that “the hospital’s appetite for consolidation is part of a national trend, driven by an evolving insurance market that has changed the way hospitals are reimbursed.” Merge to compete. Merge to survive. That instinct is no doubt driving the trend, but some observers remain perplexed as to the root of it all. “We’re just in a merger boom right now,” said Lawton Robert Burns, professor of healthcare management at the Wharton School. “It’s almost a bandwagon movement. Basically: ‘We’re not sure what’s going on, we’re not sure how to compete better, but if we get big, maybe we’ll have better success.’ ” Forbes is now reporting that Advocate Health Care and Aurora Health Care have announced that their effort to become the 10th-largest health system cleared federal regulators that have derailed hospital deals in the past. Tenth largest in a growing system of large systems. Not everyone is enthusiastic about health system mergers. The Boston Herald has an article with a dim view of the merger between Beth Israel Deaconess Medical Center and Lahey Health. The article reports that the merger, backed by the Department of Health, would blend 13 hospitals, including New England Baptist and Mount Auburn hospitals. Dr. Michael Wagner, CEO of Tufts Medical Center, expresses his misgivings this way: “The new combined Beth Israel-Lahey system would likely siphon the remaining commercial patients from non-Partners hospitals, community health centers and physicians. BI and Lahey will need to recruit physicians. In order for them to recruit physicians, they need to raise costs.”
So, is bigger really better? A recent study in JAMA (Journal of the American Medical Association) sums up the situation like this: “The healthcare system in the United States is undergoing substantial consolidation through mechanisms ranging from mergers and acquisitions to institutional affiliations to single service agreements, often with expectations of improving the safety and quality of care. However, there has been little evaluation of the risks that system expansion has on patients.1,2 In a partnership between a medical liability insurer (CRICO/Risk Management Foundation) and a health systems research center (Ariadne Labs), we analyzed the patient safety risks for Harvard-affiliated institutions by interviewing clinicians and convening system leaders both locally and nationally. “
What are the merger risks? A recent article at MedPage Today, reviewed the study findings about challenges that come during healthcare mergers. The article details how “researchers at Harvard University in Boston, including Atul Gawande, MD, MPH, analyzed the patient safety risks for Harvard-affiliated institutions by speaking with clinicians and health system leaders. Their interviews uncovered three oft-unrecognized areas of “significant safety risks” that are linked to changes in patient populations, infrastructure, or clinician practice settings.” The three associate risks are:
- After a merger, acquisition or expansion, health systems may experience changes in volume and demographics with patient populations.
- Unfamiliar Infrastructure that increases the likelihood of errors.
- New clinical settings often require a large number of physicians, especially specialists, to travel to new practice sites
Jim Molpus, a Senior Editor at Health Leaders Media, has a recent post where he sums up the merger situation then asks an important question. He writes, “When health systems merge, they most often tout advantages of increased scale and efficiency, or their ability to provide a better experience and range of services for the community. What’s usually absent from the initial press release is clear evidence that the history of such mergers has indeed made care for a community of patients less expensive or more efficient. If all healthcare is local, as the saying goes, then are mergers counterintuitive?” Are hospital leaders learning from past merger mistakes? Molpus hopes so, writing, “We have a generation of healthcare leaders now who are perhaps tempered by failures of the past and aware of the pitfalls of chasing scale blindly. There is better data. Process improvement skills are much more ingrained. Consumers and external competitors are pushing for innovation. The mix is just different this time, and maybe that’s enough for the industry to get this one right.” Mergers continue. Criticism continues. We will keep you posted on health system mergers and whether bigger really is better.