- Wayne Healthcare, the last hospital in the Miami Valley region of Ohio not affiliated with a hospital group, could soon partner with Premier Health, which currently operates six hospitals in southwestern Ohio, Dayton Business Journal reports.
- If the joint venture moves forward as planned, Premier will invest $13 million in Wayne Healthcare over the course of a 7-year contractual relationship, which could be extended.
- Hospital consolidation has been on the rise over the past several years and this deal reflects that trend, which is intended to reduce costs by improving efficiency.
The deal between Wayne Healthcare and Premier is intended to maintain local control of the Greenville, Ohio-based hospital, although Premier will be given a one-third representation on the Wayne Healthcare Board. The partnership also appears to support Wayne Healthcare plans for capital projects, which include a three-story expansion, according to Dayton Business Journal.
Independent hospitals may soon be a thing of the past as the trend toward consolidation continues. A total of 112 transactions involving hospitals went through in 2015, up 18% from the previous year, according to a report published in January Kaufman, Hall & Associates. Multiple industry experts have stated that consolidation is intended to improve efficiency, which helps to reduce costs.
“If we do not see consolidation and increase efficiency, we are going to see hospital to see hospital closures across the country,” Cleveland Clinic CEO Toby Cosgrove told Fox Business Network in November. Consolidation allows health systems to spread fixed costs over larger populations, Stephen Moore, a healthcare M&A partner at PwC, told Healthcare Dive in May.
While some industry experts say consolidation helps to contain costs, some studies suggest otherwise. MedPAC recently determined that consolidation has driven increases in private payer rates. Another study found that the two largest health systems in northern California set prices 20% high than at other hospitals in the state.