Despite provider claims, hospital M&A not associated with improved care, NEJM finds

https://www.healthcaredive.com/news/despite-provider-claims-hospital-ma-not-associated-with-improved-care-ne/569671/

Dive Brief:

  • Hospital consolidation is associated with poorer patient experiences and doesn’t improve care, according to a study published Thursday in the New England Journal of Medicine, refuting a common provider justification for rampant mergers and acquisitions.
  • The study funded by HHS’ health quality research division, the Agency for Healthcare Research and Quality, found that acquired hospitals saw moderately worse patient experience, along with no change in 30-day mortality or readmission rates. ​Acquired hospitals did improve slightly in clinical process, though that can’t be directly chalked up to the results of an acquisition, researchers found.
  • It’s further evidence that bigger isn’t always better when it comes to hospitals, and adds onto a heap of previous studies showing provider mergers lead to higher prices for commercially insured patients.

Dive Insight:

Hospitals continue to turn to M&A to navigate tricky industry headwinds, including lowering reimbursement and flatlining admissions as patients increasingly turn to alternate, cheaper sites of care. Provider trade associations maintain consolidation lowers costs and improves operations, which trickles down to better care for patients.

Though volume of deals has ebbed and flowed, hospital M&A overall has steadily increased over the past decade. The hospital sector in 2018 saw 90 deals, according to consultancy Kaufman Hall, up 80% from just 50 such transactions in 2009.

Thursday’s study analyzed CMS data on hospital quality and Medicare claims from 2007 through 2016 and data on hospital M&A from 2009 to 2013 to look at hospital performance before and after acquisition, compared with a control group that didn’t see a change in ownership.

American Hospital Association General Counsel Melinda Hatton took aim at the study’s methods to refute its findings, especially its reliance on a common measure of patient experience called HCAHPS.

“Using data collected from patients to make claims about quality fails to recognize that it is often incomplete, as patients are not required to and do not always respond comprehensively,” Hatton told Healthcare Dive in a statement. “The survey does not capture information on the critical aspects of care as it is delivered today.”

The results contradict a widely decried AHA-funded study last year conducted by Charles River Associates that found consolidation improves quality and lowers revenue per admission in the first year prior to integration. The research came quickly under fire by academics and patient advocates over potential cherrypicked results.

A spate of previous studies found hospital tie-ups raise the price tag of care on payers and patients. Congressional advisory group MedPAC found both vertical and horizontal provider consolidation are correlated with higher healthcare costs, the brunt of which is often borne by consumers in the form of higher premiums and out-of-pocket costs.

A 2018 study published in the Quarterly Journal of Economics found prices rose 6% after hospitals were acquired, partially due to limiting market competition. Groups like the left-leaning Center for American Progress have called for increased scrutiny from antitrust regulators as a result, but — despite snowballing M&A — there’s been little change in antitrust regulation since the 1980s. The Federal Trade Commission won several challenges to hospital consolidation in the 2010s, but the agency only contests 2% to 3% of mergers annually, according to MedPAC analysts.

Providers, like most actors across the healthcare ecosystem, are increasingly under fire for high prices and predatory billing practices. President Donald Trump’s administration finalized a rule late last year that would force hospitals to reveal secret negotiated rates with insurers, relying on the assumption that transparency would shame both actors into lowering prices.

A cadre of provider groups led by the AHA sued HHS over the regulation, arguing it violates the First Amendment and would place undue burden on hospitals, while potentially stifling competition. The lawsuit is currently being reviewed by the U.S. District Court for the District of Columbia.

 

 

 

Hospital M&A spurs rising healthcare costs, MedPAC finds

https://www.healthcaredive.com/news/hospital-ma-spurs-rising-healthcare-costs-medpac-finds/566858/

Dive Brief:

  • Both vertical and horizontal hospital consolidation is correlated with higher healthcare costs, according to a congressional advisory committee on Medicare, in yet another study finding rampant mergers and acquisitions drive up prices for consumers.
  • The Medicare Payment Advisory Commission found providers with greater market share see higher commercial profit margins, leading to higher costs per discharge, though the direct relationship between market share and cost per discharge was not statistically meaningful itself.
  • MedPAC also found vertical integration between health systems and physician practices increases prices and spending for consumers. The top-down consolidation leads to higher prices for commercial payers and Medicare alike, as hospitals have more bargaining heft and benefit from Medicare’s payment hikes for hospital outpatient departments.

Dive Insight:

Hospital consolidation has become a major point of concern for policymakers, antitrust regulators and patient advocacy groups.slew of prior studies have found unchecked provider M&A contributes to higher healthcare costs, with the brunt often borne by consumers in the form of higher premiums and out-of-pocket costs.

Since 2003, the number of “super-concentrated” markets has increased from 47% to 57%, according to the MedPAC analysis of CMS and American Hospital Association data. Those markets, with a high amount of consolidation, rarely see new providers enter, which stifles competition, and are rarely reviewed by the government.

There’s been little change in antitrust regulation since the 1980s and, though the Federal Trade Commission has won several challenges to hospital consolidation in the 2010s, the agency only challenges 2% to 3% of mergers annually.

MedPAC also found super-concentrated insurance markets actually led to lower costs per discharge compared to lower levels of payer concentration, deflating somewhat hospital lobbies’ arguments that payer consolidation is driving prices higher.

Committee members called for more analysis of how macro trends like an aging population and federal policy could be driving consolidation and impacting prices, leading some to call for a revamp of the hospital payment framework itself.

“We have to change the way hospitals are paid. I don’t see another solution,” said Brian DeBusk, CEO of Tennesse-based DeRoyal Industries, a medical manufacturer. “Are you going to undo a thousand hospital mergers? Are you going to enact rate setting? I don’t see another way.”

MedPAC also looked at vertical integration, where hospitals snap up physicians practices downstream. According to the Physician Advocacy Institute, only 26% of physician practices were owned by hospitals in 2012, but by last year that number had spiked to 44%.

Since 2012, billing has shifted from physician offices to hospital outpatient departments, especially in specialty practices. In chemotherapy administration, for example, physician offices saw almost 17% less volume between 2012 and 2018, while outpatient centers saw a 53% increase in volume, according to MedPAC.

Physicians in hospital-owned practices also refer more patients to the hospital’s facilities and, despite a common stumping point that integration improves quality through care coordination, its effect on quality is “ambiguous,” MedPAC analyst Dan Zabinski said Thursday at the committee’s November meeting.

Despite the mountain of evidence, the AHA published a widely-decried study in September claiming acquired hospitals see a reduction in operating expenses and a statistically significant drop in readmission and mortality rates. The study was criticized for not using actual claims data in its analysis among other methodological and conflict of interest concerns.

Republican leaders in the House Energy and Commerce Committee asked MedPAC to study provider consolidation in August, and the body’s full findings will be included in its March report to Congress.​

 

 

 

 

 

Another round of debate over hospital consolidation

Image result for Another round of debate over hospital consolidation
 
Are hospital mergers a good thing or a bad thing?

Much of the answer to that question depends on what happens after the merger—does the combined organization provide better, more efficient care, or does it use its increased leverage to raise prices? Yet another round of back and forth on this issue took place this week, as the American Hospital Association (AHA) released the results of a study it commissioned from economic analysis firm Charles River Associates (CRA), while a group of academic antitrust specialists countered with their own briefing in response.

The AHA study, based on interviews with select health system leaders and econometric analysis by CRA, shows (surprise, surprise) that consolidation decreases hospital expenses by 2.3 percent, reduces mortality and readmissions, and reduces revenue per admission by 3.5 percent—indicating that the “savings” from consolidation are being passed along to purchasers. The economists, including Martin Gaynor at Carnegie Mellon, Zack Cooper at Yale, and Leemore Dafny at Harvard, countered in their briefing (surprise, surprise) that CRA’s research was biased in favor of hospitals, and cited numerous academic studies that indicate that hospital consolidation drives overall healthcare costs higher.

Beyond the predictable debate, our view is that consolidation can and should lead to better quality and lower prices—but that it largely hasn’t delivered on that promise. The prospect of “integrated care” that’s often touted by consolidation advocates hasn’t materialized in most places, both because hospital executives haven’t pushed hard enough on strategies to produce it, and because the market lacks sufficient incentives to encourage it.

AHA says hospital mergers are good — economists say otherwise

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/aha-says-hospital-mergers-are-good-economists-say-otherwise.html

Image result for hospital market power

The American Hospital Association released a report stating that hospital acquisitions allow providers to provide better care at a lower cost to patients.

The report, which revisited an analysis concluding similar results three years ago, found acquisitions decrease cost due to the increased size of a combined system as well as clinical standardization.

Specifically, the AHA said hospital acquisitions lead to a 2.3 percent reduction in annual operating expenses at acquired hospitals. The study also said readmission and mortality rates decline at merging hospitals, and acquired hospitals see revenues per admission decline 3.5 percent, suggesting “savings that accrue to merging hospitals are passed on to patients and their health plans.”

However, the AHA’s findings — which were largely based on interviews with leaders of 10 health systems who weren’t randomly surveyed — contradict a wealth of economic data published that argues the opposite.

Last year, researchers found hospitals in monopoly markets, compared to hospitals in markets with four or more competitors, have prices that are 12 percent higher. In markets with four or more competitors, hospitals have lower prices and take on more financial risk, researchers said. Another independent analysis found hospital prices rise after hospitals combine. Researchers have also questioned whether consolidation really leads to better quality.