Hospital Realignment

Currently, the nation’s health care landscape is shifting towards integrated systems and coordinated care, which necessitates hospital realignments (such as mergers) to create sustainable market conditions for hospital care and services. This shift has naturally occurred within the health care industry, and has been further fueled by health care policies that envision a more efficient, value-based health care delivery and payment system.

Increased hospital realignment also is due, in part, to substantial public sector reductions in hospital funding, and therefore hospitals must adapt to changing economic and financial factors. The priority of any realignment is to keep hospitals open, preserve or expand patients’ access to care, and continue to provide consistent, quality care 24/7 to every patient that walks through our doors. By pursuing mergers and other realignment efforts, hospitals are able to maintain their presence in the community, and protect patient access to essential and quality care.

In January 2013, the Center for Healthcare Economics and Policy released a comprehensive analysis of hospital realignment studies, including 75 studies spanning the years 1996-2013, as well as 36 primary sources. The Center’s analysis outlines improvements in health care for communities that result from mergers, including:

  • Significant benefits to communities and patients in markets where hospitals remain open;
  • 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.

The Federal Trade Commission and the Department of Justice have primary responsibility for ensuring that hospital realignments are in compliance with federal antitrust laws, including the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. As the health care landscape shifts, these federal agencies conduct public outreach to examine activities and trends that may affect competition in the evolving health care industry. They also use their authority to review and approve or even unwind hospitals mergers, if necessary. As the health care landscape continues to evolve and the industry moves increasingly towards the goals of integrated care and coordinated health systems, the FAH will continue its efforts to inform the public conversation about health care competition and hospital realignment. It is imperative that this issue is put it in its proper context, and  focus more holistically on the total landscape and not just pricing impact.