Samantha Liss Sept. 5, 2019
The American
Hospital Association's effort to show mergers cut costs and improved outcomes
drew swift criticism from academics and industry players who pointed to a body
of research contradicting those very conclusions.
AHA released a
report Wednesday claiming acquired hospitals enjoy a reduction in annual
operating expenses of more than 2% along with a statistically significant drop
in readmission and mortality rates. Backlash to the study was swift, including
from researchers holding their own call to highlight what previous studies have
found on the effects of hospital mergers, which oppose the hospital lobby's
findings.
Martin Gaynor,
an economics and health policy expert at Carnegie Mellon University, said he
was skeptical of the AHA study because it was commissioned by the trade group
itself.
Previous studies have shown prices tend to be
higher in more consolidated markets and even mergers between hospitals in
different markets, or what's known as cross-market mergers, can lead to higher
prices. There is "substantial and clear evidence on this," he said.
"What do
you think that report is going to say? Gaynor asked facetiously. "Suppose
the report was done and they found that mergers didn't save any money at all,
would they have put that report out?"
The effort by
the AHA comes amid increasing concentration of health systems. Many acquirers
are buying cross-market players, which has garnered little regulatory scrutiny,
according to Harvard Business School professor Leemore Dafny, who researched this topic. Her study calls
for regulatory authorities to think differently and update their methodology on
assessing anticompetitive threats.
The current
methods "assume there can be no increase in bargaining leverage unless the
merging parties are vying to provide the same set of services to the same set
of patients." Dafny's paper seeks to point out otherwise.
Mergers and
acquisitions continue to reshape the healthcare landscape, according to
Kauffman Hall, which found the size of the deals continued to get bigger in
2018. And nonprofit systems were doing the acquiring in 75% of the transactions
last year. Moving forward, systems are continuing to compete against new market
entrants and are beefing up major regional footprints, according to the report.
America's
Health Insurance Plans criticized the study through various tweets attempting
to fact check the study's claims.
Rick Pollack,
CEO of AHA, said the study was authored in part by Monica Naether, whom Pollack said has a lot of
credibility, is well-respected and previously worked at the Federal Trade
Commission.
"We think
that this is a solid report and its one that deserves consideration,"
Pollack said during a conference call Wednesday with reporters.
The hospital
lobby commissioned consulting firm Charles River Associates to conduct the
report, which in part relies on interviews with health systems that have
engaged in mergers or acquisitions. The second part of the report analyzed data
on cost and quality between 2009 and 2017 and claims it found a 2.3% reduction
in annual operating expenses at acquired hospitals and a statistically
significant reduction in readmission and mortality rates.
Health system
executives said acquisitions improved clinical quality and reduced costs. The
interviews were not randomized, which garnered questions about cherrypicking
the best results.
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