Consumers worry about hospital mergers
It’s no secret the healthcare industry is undergoing massive consolidation, and hospital mergers and acquisitions are a concern among more than 60 percent of American adults, according to a new survey.
The impact of hospital consolidation is mixed, according to various research, but some studies have suggested consolidation can lead to higher prices, fewer choices and less access to care for consumers. Other research has pointed to greater efficiencies following hospital mergers.
Among consumers, the perception is clear––25 percent of adults say this trend is “a threat to their health,” according to the survey, which specifically looked at the impact of the increasing rate of hospital M&A on patients. LUGPA, a trade association representing urology group practices with more than 2,300 physicians, released the survey, which queried 1,191 adults and was conducted by polling firm YouGov.
The findings come as the level of transactions across the space has bloomed over the last few years. Several major deals closed over the last year, including:
- Lifepoint Health’s $5.6 billion merger with RCCH Healthcare Partners
- CVS Health’s $69 billion acquisition of Aetna
- Cigna’s $67 billion purchase of Express Scripts
The M&A acceleration is largely driven by a need to gain market share and align with disparities in payment policies across sites of service, according to Richard G. Harris, MD, president of LUGPA.
"Right now, we’re seeing a contest between hospitals and insurers to gain market share with the ultimate goal of becoming dominant enough in the market to command the reimbursement discussions," Harris told HealthExec. "This dynamic has been driving the mergers and acquisitions between hospitals and hospital systems, but in recent years, there has also been a substantial increase in physician practice acquisition by hospitals."
The poll underscored that Americans trust independent physicians significantly more than a hospital-based physician––65 percent to 35 percent, respectively. Similar findings were true throughout other industries, such as the trust level of a local bookstore owner versus a chain bookstore manager.
Not only were Americans concerned about M&A impacts, but more than two-thirds polled said they wanted a solution to the growing trend of independent practices being purchased by hospitals.
"Independent physicians have always understood the threats presented by the increasing trend of hospitals purchasing independent practices, and it is encouraging to see that patients across the country also see the threat," Harris said. "The data shows that patients are being impacted negatively and want government to take action against this trend."
Compensating all medical practices equally, or requiring insurers to implement site-neutral payments, was the most desired solution by respondents.
"Closing this payment gap and achieving true site neutrality between hospitals and physician practices will help level the playing field," Harris told HealthExec. "This will in turn remove the financial incentive for independent physicians to join hospital-owned systems as readily as they are today. Having more independently owned physician practices who are able to compete successfully in this healthcare market will lead to a decrease in their acquisition by hospitals."
A portion of respondents––36 percent––also wanted Congress to take action, through incentives for independent practices that will also level the playing field or by regulating hospital purchases to prevent “excessive market share.” An overwhelming 69 percent said some kind of action should be taken by the government to prevent the continued M&A trend.
The rising cost of prescription drugs was the most common concern with healthcare, with more than 50 percent of respondents, while consolidation also ranked high as a threat with 25 percent.
“Congress has begun to take notice of the public health impact, and we encourage them to continue building on site-of-service reforms, so that patients pay the same amount for a service regardless of where it is performed or if that practice was acquired by a hospital,” Harris said.
However, 31 percent of respondents said no solution is desired, citing a free market.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."