Dive Brief:
- Boston Medical Center and Tufts Medical Center are considering a merger that would culminate in the biggest union of Boston teaching hospitals in nearly two decades.
- A merger would link two nonprofit hospitals that both treat many low-income patients and have endured financial struggles. BMC, the state's largest "safety net" hospital, has an especially high number of patients on Medicaid, the government health insurance program for the poor.
- "Our organizations share a commitment to high quality, lower cost healthcare, and to serving every patient with the greatest respect and compassion," Tufts vice president Brooke Hynes said in a statement. "Bringing our strengths together could be very powerful and meaningful, and we look forward to continuing our conversations with BMC."
Dive Insight:
Consolidation is the name of the game these days in healthcare. Proponents of these mergers tout higher-quality care, but cost of care—and remaining efficient in light of financial pressures—is usually at the root of such moves. And while the trend of mergers and acquisitions is expected to continue in 2015, concerns over decreased competition, monopolies and the cost to consumers loom large.
It will be interesting to see how regulators react to this proposed merger. The Federal Trade Commission has been targeting big hospital deals with increasing frequency, and has done so successfully too. For example, it won three cases regarding hospital mergers in the last two years, in Albany, GA, Toledo, OH and Rockford, IL, and just prevailed in its first ever case challenging a health system buyout of a medical practice in Idaho.
The FTC argues that the effects of such mergers are mostly negative, as they tend to reduce competition and thereby raise prices. The agency has found that price hikes after mergers could be as high as 40% to 50%. The FTC, which notes that it only challenges 1% of such mergers and acquisitions, says that it expects hospitals to document the benefits they claim will proceed from a merger with detailed studies rather than vague assertions. It seems likely that the FTC will remain aggressive for the near future, so hospitals with merger plans had best be prepared to prove their claims of benefit.