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Maybe competition is good for what 'ails' hospitals

por Thomas Dworetzky, Contributing Reporter | February 15, 2019
Business Affairs

Gaynor authored a study of the impact of that policy that revealed that for each drop of 10 percent in market concentration, one-month mortality figures for heart attacks fell three percent.

There are other studies that show similar findings for both the N.H.S., and for Medicare in the U.S., according to Frakt.

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Nor is the impact limited to hospitals – a study in the journal Health Services Research from Thomas Koch of the Bureau of Economics at the Federal Trade Commission, and colleagues, looked at consolidation in physician market structure, specifically cardiology group practices, and found that, “an increase in consolidation leads to statistically and economically significant increases in negative health outcomes. For example, we find that moving from a zip code at the 25th percentile of cardiology market concentration to one at the 75th percentile would be associated with 5 to 7 percent increases in risk‐adjusted mortality for three of the sample populations. We also found higher expenditures in more concentrated markets.”

Hospital mergers are an ongoing trend. The 2017 total of 115, topped 2016's 102, according to an analysis released by management consulting and software provider, Kaufman, Hall & Associates.

“Providers are seeking partners for a number of reasons,” Anu Singh, managing director of Kaufman Hall, told HCB News in October, 2017. “One is to achieve economies necessary to lower total costs in the face of downward payment pressure. Another is to find partners with complementary capabilities necessary for a health care environment focused on managing population health across the continuum of care. In addition, partnerships can help with the intellectual and financial capital needed to develop innovative approaches to care, particularly outside the acute care core.”

But hospital mergers slowed in 2018, according to the research group. It reported that there had been a total of 90 announced deals and that it had found:

– The size of transacting parties continues to grow. The average size in revenue of sellers (defined as the smaller of two organizations in a transaction) has grown at a compound annual growth rate (CAGR) of 13.8 percent since 2008, reaching $409 million in 2018. This is the highest figure seen since Kaufman Hall began tracking this metric in 2008.

– The big are getting bigger. Seven transactions announced in 2018 involved sellers with net revenues of $1 billion or greater.

carey frix


March 07, 2019 10:20

Might want to pass this along to HHS who still has in place the laws prohibiting new physician owned hospitals and whose policies have caused this consolidation to start with.

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