Study: Hospital mergers reduce costs, enhance quality for patients

Sep 04, 2019 - 02:34 PM
hospital_merger

Hospital mergers enhance quality for patients and reduce costs, according to a Charles River Associates study released today.
 
The analysis, which was an update to a 2017 report, found that mergers can lead to enhanced quality through the standardization of clinical best practices, as evidenced by significant declines in the rates of readmission and mortality rates following mergers. In addition, it found mergers decrease costs and are associated with a statistically significant 2.3% reduction in annual operating expenses, and revenues per admission at acquired hospitals declined by a statistically significant 3.5% relative to non-merging hospitals, suggesting that “savings that accrue to merging hospitals are passed on to patients and their health plans.”
 
“Mergers have become one important means by which hospitals can provide their communities with high-quality, convenient and cost-effective care,” said AHA President and CEO Rick Pollack, who discussed the study’s findings on a press call today. “The benefits of mergers allow hospitals to create connected networks of care and keep the focus where it belongs: on improving care for the patient.”
 
The study also highlights how scale is increasingly critical to develop and maintain the human and capital resources necessary to address social determinants of health, adopt population health strategies and promote value-driven care.
 
Rod Hochman, president and CEO of Providence St. Joseph Health in Renton, Wash., shared how building his health system through mergers has improved patient outcomes and produced financial savings and an expansion of mental health care services. In addition, he added that mergers have allowed his health system to improve maternal health for patients, keep operating costs low, and provide more resources to rural hospitals.
 
“In every instance where we’ve had a merger, we’ve made a commitment to the savings we are giving to the community,” said Hochman, who is a member of the AHA Board of Trustees. He will become chair of the association in 2021.

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