The consolidation of, well, everything in healthcare is kind of par for the course these days, really. Insurance companies, provider networks, and hospitals are constantly merging or buying each other out, all around the nation. Small, independent hospitals in every state are regularly bought by larger chains, and go from being “Smallville General Hospital” to being “HealthCoName Patient Care Center Of Smallville” all the time.
And all that is business as usual, really. Except when it happens… who’s watching out for all those folks in “Smallville” whose hospital is closing? Who’s making sure health care stays accessible to the Americans who need it? As ProPublica reports today, in 80% of states, the answer is: nobody in particular, actually.
When mergers or buyouts happen, the new, parent company is going to look for economies of scale and places to save costs. So if you now own two facilities in the same region that do the same thing and each operate at about 50% capacity, well, why not jam them together into one facility operating at 100% capacity and keep the extra cash you were spending, right?
But when that happens, actual would-be patients — anyone who needs to seek healthcare — is losing options. And what’s left for them may not be nearby anymore or, even if it is, may no longer provide the services they need.
That’s particularly true when the chain that swoops in to do the buying is faith-based instead of secular: women’s health care services and end-of-life care may no longer be offered at a hospital that once provided them, and if all the hospitals left in the region are of that chain, well, patients are out of luck for care.
But business rules even more than ideology, ProPublica reports: services like pediatrics, neo-natal care, obstetrics, and emergency rooms are also all really expensive, and may be offered in fewer locations when the expediency of a merger demands it.
That’s where merger review comes in: if a transaction is going to run against the public interest, or actively harm consumers, you would think some kind of review board would step in to prevent the merger, or set conditions. That’s what the FTC does for a wide array of transactions… but the way the U.S. operates, state-level review is even more important for mitigating local impact. And most states just aren’t doing that kind of review of hospital transactions.
The MergerWatch report finds that only 10 states require some kind of government review before hospital facilities or services can be shut down. That means 40 don’t. And when it comes to partnerships rather than actual mergers, only eight states and D.C. have any regulatory review in place before hospitals can shutter departments. Only six states require any kind of public hearing for the mergers pending review.
As ProPublica explains, this is in large part a legacy of the 1960s and 70s: for those states that have oversight, the programs are largely 50 years old and stem from a time when the issue was too many hospitals opening, not closing. When hospitals are spreading everywhere like wildfire, and crowding every block, who wants to spend time enacting regulations for how to make sure service stays available?
But decades after that proliferation, we’re going the other way. The MergerWatch report says that the number of hospitals providing short-term acute care has dropped by 240 since 2000. And in 2015 alone, 112 hospital merger, partnership, or buyout transactions took place — a 70% increase just since 2010.
ProPublica points out that when the transaction is large enough, it does trigger federal-level review, to make sure one hospital chain won’t hold an anticompetitive monopoly over a certain region. Likewise, transactions involving non-profit hospitals often trigger a review by the state’s attorney general because of the organization’s charitable or tax status.
You can check what the report says about your state’s grade on the MergerWatch website.
Who Makes Sure Hospital Mergers Do No Harm? Almost Nobody. [ProPublica]
by Kate Cox via Consumerist
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