fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Recognizing the Importance of Hospital Realignment for Communities and Patients

May 16, 2014 | FAH Hospital Policy Blog

Category: Realignment, Uncategorized

Monday, Health Affairs will hold a briefing on hospital consolidation, featuring FAH Chairman and President & CEO of Ardent Health Services David T. Vandewater. The FAH and our members intimately understand the realities of health care delivery, and the decisions on which we base any pursuit of realignment. Hospitals bring additional improvements to their patients and communities through mergers and other realignments that help sustain health care providers in towns and cities across the country.

A review by FTI’s Center for Healthcare Economics and Policy earlier this year provided the most comprehensive, contemporary assessment of hospital realignments to date. In their assessment – which includes 75 studies from 1996-2013 as well as 36 primary sources – FTI’s analysis found that hospital realignment has yielded substantial benefits for communities and the patients they care for.

Some of the benefits to care brought about by hospital realignments include:

  • Preserved and expanded access to essential medical care;
  • Improved service offerings and quality of care;
  • Sustained and necessary investment in technology, facilities and health IT;
  • Sensible reduction in excess capacity; and,
  • More competitive health care markets.

Some in the health care industry have claimed that realignments drive competition out of the market. Yet, FTI’s analysis shows the vast majority of mergers do not impede market competition, dispelling one of many common misconceptions on this topic. The study points to reliance on 20 year old data and U.S. market conditions that do not resemble today’s market realities as a cause for the marked misconceptions.

These results challenge the oft cited notion that realignment increases prices, finding no statistical relationship between realignment and hospital price increases. FTI goes further, noting that without realignment, disruptions in emergency services, lapses in delivery of care and even hospital closures would occur.

FAH_Reality of Hospital Realignment_Untold Story_Infographic

As the health care system transforms and moves toward a coordinated care model, hospitals continuously strive to improve delivery of care while protecting patient access to care. Health care in America is shifting toward an integrated system; at the same time, hospitals are struggling to absorb nearly $122 billion in cuts over ten years, imposed since 2010 while Medicare hospital payments are projected to fall eight percent below the cost of care in 2014 – an all-time low. This challenging environment necessitates adaptation from hospitals to be able to survive, including realignments and mergers.

Realignments allow hospitals to maintain their presence, provide 24/7 access to care for patients and yield many community benefits. We look forward to a substantive conversation on contemporary hospital realignment at the briefing event Monday morning.