- Hospital mergers between 2009 and 2014 led to cost savings and quality improvements, an analysis requested by the American Hospital Association (AHA) and conducted by Charles River Associates found.
- Increased efficiencies like clinical standardization resulted in a 2.5% reduction in costs and upgraded facilities and services, findings show.
- Mergers also allowed hospitals to expand the scope of the services offered to patients and improve care.
Following the 2010 implementation of the ACA, hospitals have had to adapt to changes like payment cuts, and the rate of hospital merger and acquisition activity increased by 70%, ProMarket reported. M&A activity spiked from 2013 to 2015, the 2016 Health Care Services Acquisition Report from Irving Levin Associates shows.
As the hospital industry continued their plans for consolidating, the government became increasingly concerned over these deals potentially resulting in lower quality of care and increased prices to consumers due to reduced competition. In 2016, hospital M&A activity decreased 12.7% compared to the previous year, with a total of 89 deals. This decrease could be partially explained by the Federal Trade Commission increasing its efforts to prevent hospital monopolies and duopolies.
However, Monica Noether, vice president at Charles River Associates and lead author of the report said in a prepared statement, "The findings are clear: Hospital mergers facilitate greater efficiency that reduces costs and encourages better quality care.” The report also found hospitals to be coordinating with home health caregivers, rehabilitation centers, nursing homes, among other providers.
Thad Kresho, U.S. Health Services Deals Leader at PwC recently told Healthcare Dive, "These deals are expected continue in 2017 as providers continue expanding their networks/relationships through traditional M&A as well as new forms of partnerships and alliances in response to the continued call for improved quality, patient engagement and new reimbursement models."
Though this trend previously seemed certain to continue into the future, with President Trump’s plans for an ACA repeal, nothing is certain. This uncertainty may affect the M&A market, Ann Hollenbeck, a partner at Honigman and leader of the firm’s Health Care Practice Group, told Healthcare Dive.
According to Hollenbeck, there could be some changes in hospitals' M&A plans. If a hospital is financially stretched, its plans to sell or consolidate will likely proceed. However, if it is financially healthy and M&A plans were not satisfactory, it may slow that process down to see what changes the new administration will bring.