Hospital Federation: No Link Between Consolidation, High Prices

John Commins, for HealthLeaders Media , January 28, 2014

Refuting "conventional wisdom" and citing slowing healthcare cost growth, the Federation of American Hospitals says healthcare industry consolidation improves services and care coordination, and ensures continued access to care.

A Federation of American Hospitals-commissioned report claims, not surprisingly, that hospital consolidation improves care quality and access and that the critics who claim these "hospital realignments" drive up healthcare costs are relying on old data that does not consider the sweeping effects of healthcare reform.

"Consolidation has probably always been a good thing, but in terms of today, it actually is the mother of necessity," says Chip Kahn, president/CEO of FAH, the Washington, DC-based group representing investor-owned and managed community hospitals and health systems.

"The expectations of consumers and patients, the revenue pressures to have enough resources for hospitals, the accountability and technological requirements and obligations that hospitals have today, and the expectation that we are going to be moving toward really taking care of the patients over a continuum of care change the dynamic."

The FAH report—Hospital Realignment: Mergers Offer Significant Patient and Community Benefits—in itself provides no new data on the topic. Instead, the report cites a number of previous studies in an attempt to refute "conventional wisdom" that hospital consolidations result in higher healthcare costs.

"All too frequently, conventional wisdom suggested by media coverage is that hospital realignment, mergers and consolidations systematically result in pricing power, with anti-competitively higher prices for those needing care," the report states.

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