Hospital mergers can be a key to meet patients' needs and improve care

Rapid change in the health care field has led hospital leaders to search for new ways to reduce costs, increase the quality of care, and preserve access to care, so they can continue to meet their patients’ needs. For some hospitals, mergers may be the right path to meet these goals. This week the AHA released a new study finding that hospital mergers result in significant cost savings and quality improvements. The study, prepared by economists at Charles River Associates, found that mergers can create economies of scale, reduced costs of capital, and clinical standardization, all efficiencies that decrease costs. In fact, the acquired hospitals in the study were able to cut annual operating expenses by 2.5 percent – or $5.8 million. On top of these reduced costs, mergers were also found to have the potential to create quality improvements by standardizing clinical protocols and yielding investments to upgrade facilities and services at the acquired hospitals. Mergers typically expanded the scope of services available to patients by providing more comprehensive and efficient care. And it was found that mergers do not lead to a spike in revenues that some claim is the motivation for mergers. The study was based on recent interviews about merger experiences with executives at 20 hospital systems, combined with a comprehensive econometric analysis on mergers between 2009 and 2014. It’s clear that in some communities, and for certain hospitals, consolidation may be necessary—not only to meet the current health needs of patients, but also to provide a stable foundation upon which to build the health care system of the future. Hospital and health systems leaders must consider every possible avenue, including mergers, to give patients the high-quality health care system they deserve.