eMagazine June 2023

More documents

Recommendations

Info

OUR PEOPLE, OUR MISSION Global Health eMagazine June 2023 Global Local Section Editor: Ritesh Vidhun Merge & Acquire: The Modern-Day Business of Running a Hospital Written by Ritesh Vidhun Perspective Global Health Academy Highlights Reflections Welcome Global Local Hospitals in America have gone through significant changes over the past few decades. The 21st century brought a wave of advanced technology and treatments along with a wave of steadily increasing costs. Many providers across the United States have relied on smaller high-cost populations but as the industry moves toward value-based payments, many institutions are looking to merge with larger groups in order to avoid financial struggles. This leads to larger organizations being able to control a greater share of the market while having more influence over costs. The increased number of hospital mergers and acquisitions has an overall negative impact on healthcare in the U.S. due to lower competition and higher prices. The Increase in Hospital Mergers and Market Consolidation: Currently, the top 10 health systems in the United States, which include names such as HCA Healthcare, Ascension, and Trinity Health, control around 24% of the market.1 This staggering number has only been growing over the last decade, with increased hospital mergers & acquisitions (M&As) across the nation. There were a total of 92 M&A deals in 2019, slightly higher than the 90 in 2018 and lower than the 117 in 2017.2 In 2020, challenges brought about by the pandemic attributed to a lower number deals at 79. Hispanic and Latinx Communities Voices of Ugandan Students Global Health Mental Health Art to Rwmind Us of Who We Can Be Our Beautiful Planet Innovation and Technology Nursing Division Women’s Health Education Among the Letters Announcements Article of the Month Video of the Month Congratulations Phoro News Calendar of Events Resources What Factors Have Led to This Trend? When examining the increased levels of hospital mergers and acquisitions in the U.S., understanding the principle roots of the trend are important in navigating the complexity of the topic. One of the primary reasons for the growth of M&A deals can be attributed to the shift toward value-based payment reform. Many providers, particularly smaller ones, seek to join larger systems in order to reduce the burden of financial risk. Additionally, merging helps smaller hospitals gain access to more advanced technology, increased standardization, further coordination, and better financial support. Utilization has also been generally declining over recent years, especially during the pandemic. With lower levels of health care spending by the American population, many providers face significant challenges in maintaining their revenue and profits. After all, running a hospital in the U.S. requires some level of business strategy and executives are looking for more ways to stay afloat in this challenging economy. Although publicly, hospital groups state that the main motivations for mergers and acquisitions are to improve quality and access for patients, there are a series of financial gains that must be explored. Especially in smaller urban or suburban communities, when multiple hospitals combine, insurers are less likely to exclude one from the network despite greater prices or lower quality.3 16
OUR PEOPLE, OUR MISSION Global Health eMagazine June 2023 Perspective Global Health Academy Highlights Reflections Welcome Global Local Hispanic and Latinx Communities Voices of Ugandan Students Global Health Mental Health Art to Rwmind Us of Who We Can Be Our Beautiful Planet Innovation and Technology Nursing Division Women’s Health Education Among the Letters Announcements Article of the Month Video of the Month Congratulations Phoro News Calendar of Events Resources This gives less prominent hospitals an opportunity to increase their utilization and revenue. The growth in these mergers and acquisitions has significant impacts on the health care market and patient experience as well. What are Some of the Drawbacks? There is one main concern that health economists and experts have alluded to: higher costs and less access. In most industries, when a handful of groups or companies control a significant portion of the market, it typically leads to them being able to better determine prices due to the reduced competition. Many hospital executives believe this is not true for healthcare, including Dr. Kenneth Davis M.D., President and Chief Executive Officer of Mount Sinai Health System in New York City stating, “the fear that mergers curtail competition, leading to higher prices for medical care, reflects an old way of thinking. Thanks to cataclysmic changes in the delivery of health care, hospital mergers now offer the potential for higher quality and more efficiency.4” These arguments are not always applicable, as multiple studies conducted across the nation have found that the increase in market consolidation over the last decade have, in fact, led to somewhat higher costs for patients due to less competitive markets.5 Organizations are able to bring more weight into negotiations with insurance companies, leading to more expensive contracts and consequently higher premiums for members. This is a very nuanced subject, but in general, research shows that M&A deals do not always lead to patient benefits. But Don’t Larger Groups Lead to Higher Quality? Arguments in favor of increased mergers and acquisitions often cite greater quality of services and access to advanced treatments. This can certainly apply to smaller hospitals in difficult financial situations, however it does not necessarily apply to the wide majority of deals. A study published in the New England Journal of Medicine examined data on M&As from 2007 to 2016 while comparing a variety of quality measures to determine composite scores.6 It concluded that “hospital acquisition by another hospital or hospital system was associated with modestly worse patient experiences and no significant changes in readmission or mortality rates.” In general, M&A transactions do not lead to significant improvements in the quality of health care that patients receive, and in many cases may actually lead to lower quality. In addition to increased costs, these findings emphasize the dangers of this steadily growing trend. The Impact of COVID-19 & Looking Ahead: Prior to 2020, the number of hospital mergers was on an increasing trajectory. However, the COVID-19 pandemic has had a variety of implications that led to fewer M&A deals last year, from decreased utilization of services to massive drops in health care revenue.7 These factors have decreased incentives while increasing risks for health groups to pursue merger and acquisition deals. Although there was stunted growth on market consolidation during the pandemic, the trend continued afterward. This is apparent right here in Connecticut with the expansion of Yale New Haven Health into greater Waterbury. The number of independently owned hospitals has gone from 23 in 2000 to 6 this year.8 Although the effects are still unclear, there is a cause for concern especially in rural communities (as discussed in previous editions). If we seek to minimize these challenges and increase access to high quality services in this country, a series of important questions must be answered: Can the government restrict M&As in order to promote competition in the healthcare market? Should there be a limit to the size that hospital groups are able to grow? If public health insurance grows in the U.S. what effects will this have, if any, on the current trend of M&As? This trend will continue to have serious implications over the coming years, and is something that needs to be addressed if we seek to make healthcare more equitable and accessible for all. References: 1. https://www2.deloitte.com/us/en/insights/industry/health-care/hospital-mergersacquisition-trends.html 2. https://www.kaufmanhall.com/insights/research-report/2020-mergers-acquisitionsreview-covid-19-catalyst-transformation 3. https://californiahealthline.org/news/sutter-health-class-action-lawsuit-hospitalconsolidation-medical-prices-health-care-costs/ 4. https://www.wsj.com/articles/kenneth-l-davis-hospital-mergers-can-lower-costs-andimprove-medical-care-1410823048 5. https://academic.oup.com/qje/article/134/1/51/5090426?login=true 6. https://www.nejm.org/doi/full/10.1056/NEJMsa1901383#article_citing_articles 7. https://www.healthsystemtracker.org/chart-collection/how-have-healthcare-utilizationand-spending-changed-so-far-during-the-coronavirus-pandemic/#item-covidcostsuse_ marchupdate_1 8. https://ctmirror.org/2022/05/08/as-hospital-systems-grow-consolidate-rural-patientsct-lose-services-labor-delivery-intensive-care/ Contact: ritesh.vidhun@tufts.edu 17
Page 1 and 2: June 2023 Volume 54 NUVANCE HEALTH
Page 3 and 4: OUR PEOPLE, OUR MISSION Global Heal
Page 5 and 6: OUR PEOPLE, OUR MISSION The Ecuador
Page 11 and 12: OUR PEOPLE, OUR MISSION Week 2 and
Page 13 and 14: OUR PEOPLE, OUR MISSION Week 1 in V
Page 15: OUR PEOPLE, OUR MISSION Global Heal
Page 21 and 22: OUR PEOPLE, OUR MISSION Global Ment
Page 27 and 28: OUR PEOPLE, OUR MISSION Upcoming ev
Page 29 and 30: OUR PEOPLE, OUR MISSION Innovation
Page 35 and 36: OUR PEOPLE, OUR MISSION Announcemen
Page 37 and 38: OUR PEOPLE, OUR MISSION Video of th
Page 39 and 40: OUR PEOPLE, OUR MISSION Photo News
Page 45: OUR PEOPLE, OUR MISSION RESOURCES G

eMagazine June 2023

Create successful ePaper yourself

Delete template?

Save as template?