Dive Brief:
- According to Booz & Company, as many as 1,000 of the nation's 5,000 hospitals may seek a merger partner within the next five to seven years, in part because revenue could fall 20% to 25% over the next 10 years.
- This consolidation trend puts two sides of the government in conflict, because while PPACA tends to encourage mergers to help coordinate care, the FTC might not like the extent to which larger merged entities can pressure commercial health plans to up reimbursement.
- That being said, there are plenty of hospitals and health systems which seek to be independent; to accomplish this, large systems are investing in infrastructure while smaller groups/independent hospitals are looking for creative ways to contract with health plans, such as at-risk contracts.
Dive Insight:
With reimbursement falling, and pressure being put on hospitals to go at-risk in their health plan contracts, it's hardly surprising that mergers look pretty good to a large number of hospitals. For some it will be a choice, and others a necessary evil, but it's going to shake out pretty much as Booz predicts. The question now becomes whether partnerships and mergers driven by necessity, rather than a specific strategic plan, will actually enhance each other. Like it or not, we're probably going to find out.