Report: Hospital mergers reduce costs, enhance quality and services

Hospital mergers reduce costs by harnessing operational efficiencies that can’t be gained through looser affiliations, improve quality and expand the scope of services available to patients, according to an AHA-commissioned study by Charles River Associates, unveiled today at a briefing in Washington, D.C. The study found that hospital mergers between 2009 and 2014 reduced annual operating expenses at acquired hospitals by 2.5%, equating to $5.8 million, and are driving quality improvements and upgrades to the facilities and services. “The findings are clear: hospital mergers facilitate greater efficiency that reduces costs and encourages better quality care,” said lead author and CRA Vice President Monica Noether. Also participating in the briefing were Marna Borgstrom, president of Yale New Haven (CT) Health System, and Thomas Zenty, CEO of University Hospitals in Cleveland, who described how their respective communities have benefited from recent mergers. Toby Singer, an antitrust expert and former partner at Jones Day, said, “The antitrust agencies sometimes jump way too quickly to the conclusion that this is about market power. Ninety-nine percent of the time these are not market power grabs or a way to raise prices.” AHA President and CEO Rick Pollack said, “In some communities and for certain hospitals, consolidation may be necessary – not only to meet the current health needs of patients and communities – but also to provide a stable foundation upon which to build the health care system of the future.”