AHA Study Demonstrates Benefits of Hospital Mergers

The American Hospital Association (AHA) has provided the White House, U.S. Department of Health and Human Services (HHS), the U.S. Department of Justice, and the Federal Trade Commission (FTC) with an updated study on the benefits of mergers within the hospital field, according to a letter written to the agencies.

Further, the organization provided an updated assessment of problematic conduct by the commercial health insurance industry.

The letter cited a new study by Charles River Associates that found health systems have been able to lower costs and improve quality through acquisitions. Charles River Associates compared cost per admission, revenue per admission, and inpatient quality measures for hospitals that had been acquired to those that had not. Acquisitions were associated with a 3.7% decrease (average of $10.7 million annual decline) in net patient revenue per adjusted commission. The findings suggested cost savings resulting from hospital mergers are passed on to commercial health insurance plans. The results provided evidence that important indicators of quality of care improved at acquired hospitals post-acquisition.

According to the AHA — representing nearly 5,000 hospitals, healthcare systems networks, and other providers of care and 43,000 individual members — benefits of integrated health systems that come from mergers have been pronounced during the ongoing COVID-19 pandemic, especially for hospitals in rural areas. Prior to the pandemic, many financially unstable hospitals were at risk of imminent closure. And while 19 rural hospitals closed in 2020, even more could have closed if they could not get resources from an integrated health system.

The AHA wants to meet with members of the White House, HHS, DOJ, and FTC to discuss the study findings furthers and share its views about the benefits hospital mergers can have for communities.

The letter and new study come following President Joe Biden’s executive order issued in July that called for a strengthening of federal review of hospital deals.