Concerns raised over Indiana hospital merger

Indiana state officials continue to review the planned merger of Union Health and Terre Haute Regional Hospital, but critics say the deal isn’t the best for the region.

Union Health is moving to acquire Terre Haute Regional Hospital, but some critics say the deal isn't in the best interests of the community.

Opponents of the planned merger say that if Union Health and Terre Haute Regional come together, residents in the area would see higher prices for healthcare. The deal could also cost some workers their jobs, opponents say.

The Federal Trade Commission said in September that it opposed Union Health’s planned acquisition of Terre Haute Regional. The FTC submitted a 107-page comment to the Indiana Department of Health, citing concerns of higher healthcare costs for consumers and the potential for the quality of care to suffer.

Zack Cooper, an associate professor at Yale University, has spoken out against the merger. In an interview with Chief Healthcare Executive® Friday, Cooper says the Union Health-Terre Haute merger isn’t in the best interest of the region.

“We've just got really good evidence about what happens when two hospitals combine into a single entity and leave customers with no competitors,” Cooper says. “The answer is, the prices go up. I think we should be concerned about quality dropping. I think there's really good evidence that when prices in the healthcare sector go up it actually affects the wider economy.”

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Some hospital mergers aren’t bad, Cooper says, but he says this deal would hurt the community because Union Health and Terre Haute Regional are the only two hospitals in the region. Union Health operates its primary hospital in Terre Haute, as well as a critical access hospital in Clinton, Indiana.

“What we care about here is the reduction in competition,” he says. “These are two competing hospitals in a fairly close geographic area. It would form a monopoly for local care. It would be the largest employer in the area. It's going to clearly benefit the merging hospitals. It's not going to benefit the local community.”

Cooper and Gloria Sachdev, CEO of the Employers’ Forum of Indiana, wrote an op-ed in the Indianapolis Star last month criticizing the deal. They wrote that the merger of Union Health and Terre Haute would hurt the community by giving consumers fewer choices for healthcare.

“Despite the merging parties’ assertion that their deal would benefit Terre Haute residents, the evidence and numbers tell a different story. If the deal goes through, residents of Terre Haute will see the price of their medical care rise by 10% or more; 500 jobs lost in the community; and a 7% drop in nurses’ pay,” they wrote.

Terre Haute Regional, a 278-bed hospital, is owned by HCA Healthcare, the nation’s largest for-profit system. Union Health is a non-profit system.

Steve Holman, the CEO of Union Health, says the acquisition of Terre Haute Regional Hospital offers the best chance to improve healthcare in Indiana’s Wabash Valley.

“The proposed agreement between Union Health and Regional Hospital is not only beneficial to our community; it is necessary for the long-term success of the Wabash Valley,” Holman wrote. “It represents a forward-thinking approach to healthcare that prioritizes patient outcomes and community well-being.”

Holman wrote that Union Health’s acquisition of Terre Haute would enable the merged organization to invest in new and innovative ways to improve services for patients.

“The merger is not merely a business transaction; it is a strategic effort to improve healthcare delivery in our community,” Holman said. “By combining resources and expertise, Union Health and Regional Hospital aim to expand services, enhance the quality of care, and ultimately improve health outcomes while maintaining cost efficiency for consumers.”

Holman also argued that having more competition in the region hasn’t translated to better care. In fact, Holman points out that Vigo County already lags most of Indiana’s 91 other counties in some important measurements of public health, including ranking 68th in life expectancy.

But Cooper says the health metrics in Vigo County offer a better argument for ensuring two hospitals continue to serve the region.

“If you've got a front flat tire on your bike, the solution isn't to go slash the back tire,” Cooper says. “It's to make things better. It's not entirely clear to me. First of all, there's no evidence that when hospitals merge, community care goes up.”

“I think it's good that he's acknowledging that there are real problems in his community, but the way to address that is to help his community not to create mergers or raise his own prices,” Cooper says.

A decision is expected in the coming weeks, Cooper says. A spokesperson for the Indiana Department of Health said that the agency is continuing to review the merger application and hasn’t made a decision yet.

Federal regulators say they’re concerned about the plans for Union Health and Terre Haute Regional to come together under a “certificate of public advantage,” or a COPA. Such certifications don't allow for sufficient scrutiny, regulators say. The FTC has raised similar objections in other mergers and acquisitions under such certificates in other states.

The FTC said the competition between Union Health and Terre Haute Regional works to the benefit of patients and employers. The competition spurs health insurance companies to negotiate for lower hospital reimbursement rates on behalf of their customers, ultimately leading to lower prices, the FTC argues.

Federal regulators also note that the deal doesn’t involve one provider looking to absorb a financially troubled institution struggling to stay afloat. The commission said it reviewed both Union Health and Terre Haute Regional Hospital and concluded both organizations are financially stable, and would be able to serve the region without consolidating.

Cooper says that’s another reason for the state to reject a merger, since the deal isn’t about rescuing a facility that may fold.

“There are many communities of similar size that also have two hospitals,” Cooper says.