Elevance just published a great report leveraging data from its affiliated health plans to color in the picture that’s been loosely outlined by a few other studies: patients face higher prices and lower care quality after independent hospitals are acquired by health systems.
It’s no secret why a growing number of independent hospitals are getting scooped up each year. Elevance found that operating expenses fell by an average of 6% after an acquisition, about 60% of which can be attributed to personnel reductions.
- The share of U.S. hospital beds that belong to health systems spiked from 58% in 2000 to 81% in 2020, and a quarter of markets no longer have any independent hospitals.
- Hospitals inked 20 M&A moves in Q2 alone, opting for consolidation in order to secure additional resources and negotiate more favorable contracts with payors.
That isn’t exactly great news for patients. Independent hospital acquisitions resulted in 5% higher costs for patients with commercial health coverage, and increases ranged from 5% to 8% across top diagnostic categories by volume (Ex. digestive, respiratory, and circulatory).
- Elevance also noted that its members receiving cardiac care saw readmissions increase over 10%, and that acquired hospitals with greater staff reductions unsurprisingly experienced a greater increase. Readmissions for Medicare patients with acute non-deferrable conditions saw a more conservative increase of 2-3%.
- The numbers were a little more vague surrounding access to care, although the study “observed the closure of maternity wards, which were concentrated in rural hospitals.”
What’s the solution? In Elevance’s view, regulators should seek assurances that patients won’t face higher costs following an acquisition, especially considering the efficiency gains for the health system. Regulators might also consider implementing quality standards during the approval process to ensure that readmissions and access aren’t harmed as a result.
Elevance might have its own reasons for wanting to keep costs down at health systems, but it’s also putting out some credible evidence that suggests hospital acquisitions aren’t doing patients any favors. That said, there are plenty of very real pressures driving hospitals toward consolidation, and reports like this are important for helping policymakers chart the best path forward.