The big keep getting bigger when it comes to hospitals and health systems—and how that affects emergency physicians remains to be seen. Earlier this year, Community Health Systems (CHS) of Franklin,Tenn., completed its $3.9 billion acquisition of Health Management Associates (HMA), based in North Naples, Fla. CHS now owns, leases, or operates 206 hospitals in 29 states, making it the country’s largest for-profit hospital operator ranked by number of hospitals.
The merger was blessed by the Federal Trade Commission (FTC), but only after CHS agreed to sell Riverview Regional Medical Center in Gadsden, Ala., and Carolina Pines Regional Medical Center in Hartsville, S.C., and related assets in both markets. The FTC said that, had those institutions been included in the merger, there would have been reduced competition in those areas. That FTC decision to force that sale came around the same time a federal judge decided that St. Luke’s Health System of Boise, Idaho, could not continue to own a multi-specialty medical group, Saltzer Medical Group of Nampa, Idaho.
The FTC and others sued late last year to unwind St. Luke’s 2012 acquisition, saying “the combination of St. Luke’s and Saltzer would give it the market power to demand higher rates for health care services provided by primary care physicians in Nampa, Idaho, and surrounding areas, ultimately leading to higher costs for health care consumers.”
The judge agreed, and the case was highlighted as one that may change the future of health systems merging with local physician groups to integrate more services. It also, in effect, laid out the clear juxtaposition behind the current merger trend: health systems continue to look to add services and size as Medicare reimbursement payments slowly but surely move toward population health strategies and fiscal efficiencies driven by economies of scale.
But the frenetic pace of mergers—CHS alone has struck more than two dozen deals in the past seven years, according to the New York Times—means that smaller hospitals or medical groups may not be able to compete as a handful of regional or national firms dominate the landscape. It’s a delicate balance aimed at providing the best care, but not from a position that eliminates consumer choice or gives one system the ability to negotiate higher reimbursement rates from health insurance plans that will ultimately be passed on to the consumer, the judge in the Idaho case wrote.
For emergency physicians at acquired hospitals or medical groups, immediate fears typically range from staff reductions to lessened hospital support from a less local owner. But in markets across the country where CHS has acquired HMA hospitals, executives are saying that’s not the case.
“This transaction provides us with increased scale and broader geographic reach as we work to create strong health care networks across the nation,” CHS chairman and chief executive officer Wayne Smith said in a news release when the merger consummated. “Our larger organization is well positioned to address the changing dynamics in our industry and dedicated to providing quality care for millions of patients and all the communities we serve.”
Still, the Idaho case—which St. Luke’s has said it intends to appeal—highlights that the continued pace of growing hospital systems is likely to be the focus of attention.
The ruling “is a significant victory for the (Federal Trade Commission),” Jonathan Lewis, an antitrust attorney for Baker Hostetler in Washington, D.C., told the Idaho Statesman newspaper, “and should serve as a clear signal to hospitals looking to, and those that have already, acquired physician groups.”
Richard Quinn is a freelance writer in New Jersey.