Be Well: Is federal health reform to blame for hospital consolidation?

University Hospitals, Cleveland (Photo Courtesy University Hospitals)
University Hospitals, Cleveland (Photo Courtesy University Hospitals)

Mergers & Affiliations

University Hospitals has announced three mergers in the past six months. The Cleveland Clinic has been expending in different ways, including plans to affiliate with ProMedica in Toledo.
The trend of consolidations has picked up in recent years, according to Ceci Connolly, a health research institute leader with the national consulting firm PWc.

But Connolly says the Affordable Care Act is not the only cause.

"In terms of the Affordable Care Act, it's probably having a modest impact on this activity and the impact is in the ACA there are many incentives and nudges to get providers to work together in more of a team to take care of patients," Connolly says.

The biggest factor driving consolidation is basic price pressure from insurers and consumers who are tired of paying astronomical cost, she says. Indeed, executives have said during recent announcements that mergers and affiliations can provide the opportunity to buy supplies in bulk and cut down on the number of high-paid executives.

ACA, Cost Pressures are Factors

Robinson Memorial's long-time Chief Executive Stephen Colecchi says the Affordable Care Act and price pressures caused the merger.

"It's important to drive costs out of the system, to get as efficient as we can get and to improve our care delivery model. It's pretty difficult for a smaller, community hospital as an independent organization to be able to achieve those things," Colecchi says.

Last year, when Akron General announced it was planning to be acquired by the Cleveland Clinic and Nashville-based Community Health Systems, Akron General's Chief Executive "Tim" Stover also spoke of the ACA as a factor.

"It's been clear that in order to have enough band with to deal with all the issues out there, you're going to have to be bigger," Stover says."And even though we are what is classified as a large system - over $600 million in revenue - it's not big enough. And we've had two or three consultants tell is that based on the environment, the number has to - in order to survive, is nowhere close to where we were."

Akron General's deal with CHS and the Clinic was called off in early January. But executives there say they are still looking for a partner and haven't ruled out the Cleveland Clinic. In addition, they want a deal done sooner rather than later.

Changing payments

The ACA has pilot programs that set up new ways of paying the hospitals. For example, hospitals are now getting paid extra from Medicare if a patient does not return to the hospital within 30 days of having some surgeries.

Hospitals say they need the right team of doctors and specialists in place to keep track of individual high-risk patients. And executives at UH and the Clinic have said they can hare ways to improve care and outcomes with the smaller hospitals.

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