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Dive Temporary:
When impartial hospitals are acquired by multi-hospital well being methods, they expertise boosts to profitability and effectivity, in keeping with a brand new examine printed within the Journal of Political Financial system Microeconomics this week.
Acquired hospitals noticed profitability enhance by about $14 million per 12 months, on elevated client costs and cuts to nonclinical employees.
Nevertheless, when corporate-owned hospitals are acquired by different well being methods, they don’t expertise comparable effectivity beneficial properties, the examine discovered, suggesting there may be possible a restrict to how a lot consolidation can profit hospital efficiency.
Dive Perception:
Healthcare consolidation is rising within the U.S. As of 2020, multi-hospital methods managed 81% of U.S. hospital beds — up from 58% in 2000, in keeping with the examine.
Well being economists on the College of Pennsylvania’s Leonard Davis Institute of Well being Economics in Philadelphia sought to tease out the circumstances beneath which hospitals would possibly profit from consolidation.
The examine tracked hospital efficiency post-acquisition between 2013 and 2017 for impartial hospitals and corporate-owned hospitals.
Common hospital inpatient costs rose by as much as 11% following an acquisition.
Impartial hospitals acquired by well being methods lower a mean of $11.2 million in annual expenditures by way of chopping nonclinical employees in administrative, upkeep and provide, medical data and pharmacy departments.
In addition they noticed their 90-day readmission charges rise, presumably indicating a degradation of high quality. The rising readmission charges might be related to having fewer assist employees available, in keeping with the examine.
System-owned hospitals acquired by different well being methods, however, didn’t lower working prices or expertise effectivity boosts following acquisition.
The discovering is critical, given mergers are sometimes touted by supplier teams as a manner for hospitals to optimize operations. Hospital teams argue aligning with bigger well being methods permit struggling hospitals to centralize sources and enhance their bargaining energy with payers.
“This implies that the primary time an impartial hospital transitions to system possession, the system does a fairly good job of optimizing human sources, and future transactions will not be actually in a position to enhance on them,” mentioned Atul Gupta, assistant professor of healthcare administration on the Wharton College of the College of Pennsylvania, who authored the examine.
The examine provides to a rising physique of literature suggesting some well being system mergers can lower high quality of care and lift client costs.
The examine ought to give antitrust regulators “meals for thought,” Gupta mentioned.
“For instance, one clear implication is that when a hospital is already system-owned and it will get acquired by one other system, there are unlikely to be any efficiencies for shoppers, as a result of we have now proven that these offers don’t lead to a discount in working prices,” he mentioned.
Gupta mentioned it was an “open query” whether or not sufferers profit from the efficiencies gained throughout first-time acquisitions.
