In the latest of what has been a series of hospital mergers in recent years, Greensboro-based Cone Health recently announced intentions to consolidate operations with Sentara Healthcare, another health system based out of Virginia. The merger produces a massive conglomerate that spans 17 different hospitals, including Cone’s five facilities in and around Greensboro.
While one might assume that combining strengths would lead to improved or enhanced benefits for the patient, history and several studies prove otherwise.
In 2018, Harvard University, Harvard Business School, and Columbia University uncovered that “hospitals acquiring another system member in-state raise price by 7-10 percent.”
Other research suggests that even a 10 percent increase might not fully cover the assault on pricing that happens when two hospitals closely linked in geography merge. The Robert Wood Johnson Foundation—the country’s largest public health philanthropy—estimated that hospital consolidation caused price increases of 40 percent or more, with the best-case scenarios still resulting in increases of at least 5 percent.
The reason for the escalation in price is simple: Mergers create a lack of competition. The American economy is built on having competition. When there’s no competition for services, the business can set its prices as high or as low as it wishes.
But, there’s still hope that a consolidated healthcare system will churn out better patient outcomes, right? Sadly, no—and in some cases, the opposite is true. Care and outcomes can actually regress.
In fact, some studies have even illustrated that hospital competition can literally save lives.
One paper from 2011 on acute myocardial infarction noted that the difference between a competitive market and one with no competition was about 300 fewer deaths per year. Other studies indicated that heart attack mortality fell more than 10 percent in markets with hospital competition.
The Robert Wood Johnson Foundation found a similar theme in terms of quality of care and outcomes among U.S.-based hospitals who engaged in a merger. “All of the U.S. studies except for one find that competition improves quality,” the Foundation said.
Moreover, the timing of the Cone deal feels, at best, misguided—if not inappropriate.
Joined by the rest of the U.S., North Carolina remains in a fight against COVID-19, a bout that most believe has no immediate end in sight. Rather than ironing out the details of a merger, shouldn’t all of the health care community’s energy be directed toward helping North Carolina stave off the ongoing pandemic?
Higher costs. Lower quality. In the middle of a pandemic.
That doesn’t sound like it’s in the best interest of North Carolina.