There are five concerns that are consequences of merging hospital systems that everyone in America should know about. These so-called hospital monopolies have several consequences, positive and negative, but are more than likely to concern the health care community and the patients that it serves. Here is a quick primer on the main concerns when discussing hospital mergers.
1. Rising Premiums
The primary concern that plagues hospital systems that merge is an antitrust issue; if two hospital systems merge to control the majority of health care in one location, it could be considered a violation of US antitrust laws. This is because when competing hospital systems merge, they can also control premiums in the area. This occurs when two hospital systems merge and the new system demands that health insurance companies pay more for services while simultaneously lowering the volume of health care it provides to a community. The result can be that patients must pay higher premiums to get the same amount of health care prior to the merger; in some cases, premiums skyrocket while health care options decrease.
2. Reducing Incentive to Upgrade and Improve Services
Merging hospital systems tend to be located in the same geographical area; by merging with another hospital system, it eliminates competition in that area. For communities, this could signify a plateau or decline in services because the once-competing systems have now joined forces. This could mean that services and facilities that need to be improved or upgraded may never see those improvements because there is no longer a competitive advantage in upgrading the system’s facilities. This is especially true if the hospital systems that have merged make up the majority of the hospitals and facilities in a certain area.
3. Clashing Cultures
With hospital systems mergers come the clash of cultures. Because each hospital system has its own management and personnel culture, it makes sense that a merger will bring about personality and culture clashes. This is evident when hospital systems mergers come with a personnel layoff and a restructuring of management, but it’s not limited to this: culture clashes can bring about whistle-blowing on certain hospital practices or result in hospital management resigning in protest of a culture they deem to be unethical. This is a concern for hospital staff and the community they serve because culture clashes can impact health care if the issues are not resolved before the merger is completed.
4. Debt
Another concern of a hospital system merger is the fact that some systems are acquired using debt. The decision to use loans in order to acquire a system puts a burden on the new hospital system because it needs to be able to find a way to repay the loan. Debt can also put a hospital system in the unenviable position of needing to cut corners in order to save money or laying off staff. Both of these consequences impact health care for the community and can easily be rectified by requiring hospital systems who want to merge to demonstrate sound financial practices and little to no debt before the merger is approved.
5. Underlying Problems Become Exacerbated
The last major concern of hospital systems merging is the fact that previously undisclosed problems, such as management issues or procedural conflicts, may become exacerbated by the merger. In fact, since many hospital systems are controlled by a board of investors, the merger could be a reason for ousting management, canceling previously approved projects and renovations, and more in a bid to save the investors money. Alternatively, underlying problems that are brought to light by the merger may be left untouched if they do not present significant problems until they inevitably become catastrophes that injure the hospital and its community.
While many people think that hospital mergers can have a positive effect on the community, it has yet to be proven as fact. That’s why research on these mergers is important, especially if an individual’s health care could change because of a result of a merger in their area. These five concerns of hospital systems merging is a great place to start, but with a little research, a full picture of the effect of these mergers can be formed.
