Report: Hospital Mergers, Acquisitions Have Potential to Drive Down Costs
June 5—A study of community hospitals that were involved in a merger or acquisition over the past six years shows that such arrangements have the potential to decrease costs by increasing efficiencies, achieving economies of scale, and improving quality and access to care at reduced cost.
The report, released by the American Hospital Association (AHA) and the Center for Healthcare Economics and Policy, found that just 10 percent of community hospitals—551 hospitals total—were involved in a merger or acquisition in the past six years, with the majority of activity involving expansion into new areas or occurring in areas with more than five hospitals.
The report points to a number of instances where mergers and acquisitions have changed the healthcare landscape in the affected communities in a positive way by enabling hospitals to retain vital services that benefit patients and communities and by strengthening ties that support improved coordination across the continuum of care.
For example, when Avita Health System in Galion, Ohio, acquired Bucyrus Community Hospital in Bucyrus, Ohio, the acquisition saved more than 250 jobs, increased technological efficiencies, and resulted in expanded access to care in the rural area, according to a release.
One hospital was in bankruptcy when it was acquired; one larger hospital that was struggling financially before the acquisition was transformed into a regional children’s hospital that improved access and services for families with children throughout the region; and another acquisition was made with the promise of a replacement hospital and new services, such as a birthing center, to support the community’s healthcare needs, according to the report.
Publication Date: Wednesday, June 05, 2013