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Will Your Merger Pass the Smell Test?

Philip Betbeze, for HealthLeaders Media, May 11, 2012

That said, the FTC has had some high-profile victories in recent years. The warning from these recent cases: Just be sure you're doing it for the right reasons—which can be almost any—with the exception of dominating your local market.

Capps, an expert on hospital consolidation, was called to testify in the case in which the U.S. District Court for the Northern District of Illinois subsequently enjoined the merger between Rockford Memorial Hospital and St. Anthony Medical Center. He testified that a merger between the two would result in a combined entity that would control 59% of patient admissions in the area for general acute care, and 64% of patient hospital days.

Not good, because that level of control is essentially a monopoly, as no insurer in the area could possibly afford to neglect allowing the combined entity into its network, at almost any price. If the leaders of these two hospitals had thoroughly examined these issues in a weekend retreat, they could have nixed the merger in time for lunch on the first day.

That's another way of saying these mistakes are eminently avoidable.

At this point, you're probably confused, as I was. On one hand, the government seems to be encouraging consolidation through its many new regulatory burdens and its insistence on developing a better way to ensure continuity of care among patients.

All of that requires significant expenditure and retooling of the workforce and work patterns. After all, the legislation of the Affordable Care Act seems to penalize those health facilities that aren't integrated. So isn't consolidation in healthcare good for the continuum of care, and good for patients?

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