1. Sofer, Dalia


Patients, health care providers, and communities are all affected.


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In the past decade, the health care landscape has become a chessboard, with hospitals sending their knights and pawns to absorb other providers. Mergers and acquisitions have seen a dramatic rise, from 74 in 2010 to a record 115 in 2017. In 10 of these, the sellers had net revenues of at least $1 billion-making them the largest number of megadeals ever recorded. Activity has since remained strong, with announcements of 90 deals in 2018 and 92 deals in 2019.

Figure. Protestors d... - Click to enlarge in new windowFigure. Protestors demonstrate against the planned closure of Hahnemann University Hospital in Philadelphia, which employed over 2,500 people and served the city for over 170 years. Photo by Matt Rourke / AP Photo.

The forces behind these deals are numerous, including a shift toward value-based reimbursement prompted by the passage of the Affordable Care Act in 2010 and the Medicare Access and CHIP Reauthorization Act in 2015, diminishing hospital margins, record-high health care spending, and the emergence of such nontraditional competitors as Google, Amazon, CVS, and Walmart, which are launching their own retail health clinics.



Proponents-among them the American Hospital Association-argue that consolidation helps hospitals to increase scale, become more efficient, reduce costs, improve care, and acquire more advanced technology.


But results have so far been lackluster. According to a 2018 analysis of 25 metropolitan areas with the highest rate of consolidation from 2010 through 2013 (conducted for the New York Times by researchers at the University of California, Berkeley) mergers raised prices by abolishing competition. In most areas, the price of a hospital admission rose between 11% and 54% in the years following the merger. One example is the New Haven-Milford area in Connecticut, where Yale New Haven Health, one of the largest hospital groups in the state, overtook the only competing hospital in New Haven and continued expanding along the coast. According to the analysis, as competition was nearly abolished in the area, the price of a hospital admission-already three times higher than elsewhere in the state-rose by 25% from 2012 to 2014 (compared with 7% in the rest of the state).


A 2017 study by the Commonwealth Fund echoed concerns regarding anticompetitive behavior, finding that both hospitals and physician organizations merged horizontally and vertically between 2010 and 2016, leaving 90% of all metropolitan areas with highly concentrated hospital markets. And a National Bureau of Economic Research study of 366 mergers and acquisitions that occurred between 2007 and 2011 found that for people with private insurance, prices increased by more than 6% when the merging hospitals were located close to each other (five miles or less) but not when the hospitals were distant (more than 25 miles).


For hospitals, the golden goose of consolidation is the increased ability to negotiate higher reimbursement rates with insurers. And some states have been pushing back. In 2010, the office of Martha Coakley, then attorney general of Massachusetts, argued in a report titled "Examination of Health Care Cost Trends and Cost Drivers" that price variations within the same geographic area and among providers offering similar levels of service were "correlated to market leverage as measured by the relative market position of the hospital."


California, too, has challenged the trend. In 2018, Attorney General Xavier Becerra filed a lawsuit against Sutter Health, the largest hospital system in Northern California, for anticompetitive practices deemed unlawful according to the state's antitrust laws. Sutter Health agreed in December 2019 to a $575 million settlement used to compensate employers, unions, and state and federal governments. It also agreed to limit the cost of out-of-network benefits and refrain from forcing insurers into agreements that demand inclusion of all Sutter facilities.



Cost containment hasn't been the only unfulfilled promise of consolidation. In a study published January 2 in the New England Journal of Medicine, researchers found that acquisition was associated with modestly worse patient experiences and little difference in readmission and mortality rates. Results on quality-based on measures related to cardiac, pneumonia, and perioperative care-were inconclusive. "Taken together, these findings provide no evidence of quality improvement attributable to changes in ownership," the authors conclude.


Diana J. Mason, PhD, RN, FAAN, senior policy service professor at the George Washington University School of Nursing in Washington, DC, concurs with these findings. She tells AJN that in her home state of New York, she has watched "as a small rural critical access hospital that struggled to remain open was acquired by a health system in the region. That health system," she says, "was then acquired by a larger system located in a major metropolitan area. [But] the larger system seems more concerned with its image than with the quality of care in the local hospital." For example, she explains, all press releases and communications from the local hospital, along with any proposals for new initiatives for the community, must now first be approved by the parent system. "The bureaucracy is stunning and crippling, stifling timely communication with community members," she says. "Too often, the 'efficiencies' that the mergers and acquisitions promise lead to assembly-line care that ignores the local needs and customs of those served by a local hospital."


Also concerning, according to a May 1, 2018, JAMA analysis, are risks to patient safety. These include changes in patient populations for which staff may not be adequately prepared. For example, an influx of non-English-speaking patients may require more interpreters and care coordination with community services. Infrastructure changes may also increase risk as they may require a learning curve, making such routine tasks as transferring patients or navigating electronic health records more time consuming and error prone. In addition, the need for some clinicians-especially specialists, such as cardiologists, surgeons, oncologists, and obstetricians-to travel to new practice sites also poses a risk to patients, as a new setting often presents unfamiliar processes, teams, and clinical cultures.


The issue of disparate clinical cultures may in fact transcend organizations' internal customs and extend to a clash of social and religious values, as may happen, for example, when a nonreligious facility merges with a Catholic one. One such case occurred during a trial affiliation in 2010 between Arizona's Sierra Vista Regional Health Center and Carondelet Health Network, which is part of Ascension Health, the nation's largest Catholic health system. When a woman having a miscarriage was denied the option to medically end the pregnancy-necessary to avoid infection-and was instead sent 80 miles away to Tucson, a public outcry ensued. Sierra Vista consequently ended its trial affiliation with Carondelet, restored reproductive health services, and entered into a new agreement with another, nonreligious health system.



And what of employees? They are often treated as an afterthought in discussions of mergers, but medical facilities consist of people. When these facilities undergo significant shifts, so does the environment in which employees work. In a 2014 study published in BMC Health Services Research, the authors examined 57 hospitals involved in 23 mergers in Norway between 2000 and 2009. They found that mergers had a significant effect on employee health, measured by long-term absence due to sickness. A 2008 report by the Agency for Healthcare Research and Quality, Patient Safety and Quality: An Evidence-Based Handbook for Nurses, also found that restructuring and mergers were associated with increased nurse burnout and less job satisfaction. "Organizational and unit leaders would be wise to carefully assess work relations, work responsibilities, and the availability of resources, all of which may be sources of dissatisfaction and burnout," the report recommends. Also important are employee empowerment, empathetic leadership, and staffing changes that ensure the employment of more licensed nurses.


For the time being, mergers and acquisitions are likely to continue. And, according to Health Professionals and Allied Employees-the largest union of RNs and health care professionals in New Jersey-the risk to communities may be great. Among other concerns, the union notes on its website that "a service area monopoly puts a community at risk of no health care or limited access to care if the health system fails."-Dalia Sofer