Hospital mergers have been rampant in New Jersey since 2014, raising the issue that patients could be negatively affected, especially with raised health care costs and insurance premiums.“It is important to understand why mergers happen in the first place,” Kerry McKean Kelly, vice president of communications at New Jersey Hospital Association, recently told Patient Daily. “There are a few factors that drive hospital mergers.”
Kelly explained that the Affordable Care Act (ACA) is a driving force in a number of mergers in New Jersey where there are at least hospital mergers currently in the works.
Health-care mergers that aim to align with the Affordable Care Act are trying to create incentives for physicians and hospitals to work together in a more accountable environment, bringing standardized care and clinical trials to a larger portion of the population. Without hospital competition, Kelly explained, it could eliminate necessary competition that could help keep costs down.
“When hospitals merge to align with the ACA, it is usually to help coordinate care and reduce health care costs," Kelly said. "At the same time, competition and the choices it provides can also disappear. Being a part of a larger system also means that rates could be set and the hospitals within that system have to accept them.”
There is also an issue with reimbursement pressure, Kelly argued. Hospitals have taken serious Medicare cuts and Medicaid is a “bad payer, at least they are in New Jersey.” This pushes smaller hospitals into mergers with larger hospitals that can absorb those deficits.
Another appeal for hospital mergers is the increased capital to help build facilities and new service lines that hospitals may not have offered before when they were on their own, she said. It can also help patients and consumers keep continuous access to health care services in their community instead of having to travel longer distances for medical care.
“A very fragile hospital may have to close, but a merger could keep acute health care systems open, which could be a big benefit for patients in need of such services.” Kelly said.
Kelly explained that health care mergers can benefit a community, especially when the current system is unable to maintain itself, whatever the reasons may be. At the same time, larger systems can create more expensive care for patients if there is no competition.