Despite earlier claims that its former vice president would be taking trade secrets to a competitor, Optum agreed to dismiss the lawsuit.
UnitedHealth Group's Optum Inc. has agreed to the dismissal of a lawsuit the company filed against one of its former executives who took a job with Haven, the healthcare venture backed by Amazon, Berkshire Hathaway, and JPMorgan Chase.
David Smith was an Optum vice president when he accepted an offer late last year to become director of product strategy and research for Haven, setting off a proxy skirmish between the interests of an established healthcare powerhouse and those of an aspiring disruptor.
Optum sued Smith in January, accusing him of taking nonpublic information to a competitor. A federal judge allowed Smith to continue working for Haven and sent the trade secrets dispute into closed-door arbitration. That kept the matter largely out of the public eye for more than six months, until Friday, when the parties filed a stipulation of dismissal with the court.
The brief filing, signed by attorneys for Optum, Haven, and Smith, states simply that the parties agree to dismiss all claims and counterclaims in the case, with each side paying its own fees. It doesn't mention arbitration or any possible settlement.
Spokespeople and attorneys for the parties to the lawsuit did not respond to HealthLeaders' calls and emails Monday seeking comment.
Smith's profile on LinkedIn indicates that he is still employed by Haven.
Several major healthcare organizations are expected to back two different offers for the 188-bed facility, one of two children's hospitals in the city, as Harold Brubaker reported for The Philadelphia Inquirer.
"This remarkable consortium is a bright light in an otherwise dark moment in Philadelphia healthcare that would bring together four key nonprofits to safeguard children in our community," Jefferson Health CEO Stephen K. Klasko, MD, MBA, said in a statement at the time.
The projections present an opportunity for healthcare organizations to intervene where U.S. employees spend a big chunk of their time: at work.
The amount of money U.S. employers spend on medical benefits for their workers is expected to rise at about the same rate next year as it did this year.
Those costs are forecast to increase 6.5% in 2020, more than doubling the anticipated 2.7% general inflation rate, according to the expectations of Aon, a global professional services firm, as outlined in the company's report on 2020 medical trend rates.
The increase is attributable to higher specialty drug costs, moderate increases in provider prices, and utilization rates that are either even or declining, according to Aon's analysis.
Although the projections are stable compared to recent years, they represent an opportunity for healthcare organizations to alleviate a pain point for employers, who are among the nation's top purchasers of care.
The biggest threats to the sustained health and wellness of the American workforce are well-known, according to the report: physical inactivity, poor nutrition, obesity, substance abuse, and aging-related ailments. Some of those risks may be mitigated by encouraging healthier behavior.
"Many of the risk factors lead to chronic conditions with long-term medical costs that make them difficult to treat and result in long-term medical cost increases," said Tim Nimmer, Aon's global chief actuary for Health Solutions, in a statement.
"As a large portion of our waking hours are spent on the job, the workplace is a logical place to create a healthier culture and change behaviors," Nimmer added.
Employers should consider beginning with a strong plan design and financial strategy, but once that foundation has been laid, they should actively promote a healthy workforce by making timely care and chronic condition management available, reducing the risk of accident and illness, educating workers, and nudging employees to engage in healthier behaviors, according to the report.
Full-fledged M&A activity can be risky, which is one reason why partnerships seem to be in vogue. But healthcare CEOs know there are at least a few strategic pitfalls to avoid.
Health systems can pursue ambitious growth strategies that don't necessarily entail extensive merger and acquisition activity.
That's one reason why healthcare strategy leaders are so eager to discuss the topic of non-M&A partnerships, as the industry transforms in the face of disruption and consolidation.
Many senior leaders are deciphering when and how they or their peers should partner, whether by choice or out of necessity.
"Many organizations either don't have a merger partner or the scope is beyond what they want to do," says Joseph Golbus, MD, president of NorthShore Medical Group in Evanston, Illinois. "But partnerships are very much becoming a more prominent way of advancing your agenda."
Here are a few pitfalls to avoid:
1. Don't Assume Competitors Can't Partner
NorthShore began a partnership last year with entities affiliated with Advocate Aurora Health, which is generally considered to be one of its Chicago-area competitors, Golbus says. But the two saw an opportunity to share pediatric resources.
"Many organizations are struggling to have the volume to support a pediatric enterprise, as we were," he says. "Creating a partnership with them, while it's early-on, has really been a very different way of doing business for us but very, very positive."
Suzanne Anderson, MBA, president of Virginia Mason Medical Center and executive vice president of Virginia Mason Health System in Seattle, says her organization has partnered with its rivals on multiple projects, including the Puget Sound High Value Network, an accountable care organization and clinically integrated network that serves Washington state employees.
Although leaders naturally want to keep control in their own hands, there are good reasons to consider a more collaborative approach in limited areas, even as partners continue to compete elsewhere, Anderson says.
"It allows each of the parties to really stay true to who they are but to find common ground and common vision, where when we work together, we can actually leverage the strengths of each other to help each of us," she says.
2. Don't Shy Away From Experimental Solutions
Other health systems, too, are partnering their way to creative solutions for the problems that plague them all.
Seven health systems in New Jersey partnered earlier this year on the Healthcare Transformation Consortium to select a single administrator for their self-insured employee health plans. The aim, they said, is to solve a riddle facing other businesses: how healthcare purchasers can ensure they're paying for high-quality services while reducing overall costs.
Similarly, a growing number of health systems are backing the nonprofit alliance Civica Rx to alleviate another widespread problem: drug shortages and high costs.
At some point, Anderson says, providers may have no choice but to partner with one or more of these non-provider organizations.
"There is a lot of uncertainty about what the future holds, and there are many skill sets that traditional healthcare hasn't developed to the same extent that's available out in the market," she says.
"I think there's going to be a lot of experimentation and a lot of leveraging different skill sets through various partnerships because, quite frankly, there's not enough money for everyone to do it themselves," she adds.
3. Don't Surrender Your Local-Market Edge
Regardless of the opportunity's scope, it's important to assess not only the cultural and business alignment of the potential partner but also the strategic local market impact of the potential partnership, says Gary Baker, FACHE, the CEO of three HonorHealth hospitals in the greater Phoenix, Arizona, area.
"How do you become the indispensable service provider in your market? And do you need to do that all by acquisition, or can you do that through partnership?" Baker says. "And even with partnership, how do you vet out the right partners?"
"You want something that enhances your brand with a partnership, not that detracts from your brand, and I do think that takes some diligence," he adds.
These are some of the topics and questions participants will discuss during the HealthLeaders CEO Exchange, to be held September 25–27, 2019, in Park City, Utah. The gathering includes leading hospital and health system CEOs for a custom dialogue on only the critical issues facing the future of their organizations. For more information, please email exchange@healthleadersmedia.com.
Editor's note: This story was updated Friday, September 13, 2019, with additional information.
The exiting president and CEO has been credited with leading the nonprofit system's financial turnaround. But he has also seen his share of controversy.
The top executive of Erlanger Health System, based in Chattanooga, Tennessee, has left the organization after months of smoldering conflict with some of the nonprofit's physicians.
President and CEO Kevin Spiegel's departure was immediate, according to a statement released Wednesday by board chairman Mike Griffin, who offered his well-wishes to the departing leader.
Spiegel, who had been on the job more than six years, reportedly said his separation from the organization was a mutual decision.
"We're still working out the details, and hopefully that'll be complete by the board meeting in two weeks," Spiegel told the Times Free Press' Elizabeth Fite. "This is a great hospital, and it's a great organization, and it's only going to do better and better things."
Erlanger's board is expected to pick Spiegel's successor in two weeks, at its regularly scheduled board meeting, according to Griffin's statement.
Spiegel's exit comes less than two weeks after the board held a special public meeting to talk about physicians' concerns and criticism of Erlanger's senior leadership team.
Spiegel is the third high-ranking Erlanger executive to leave since Fite reported in June on a letter from the Medical Executive Committee explaining its reasons for a unanimous vote of "no confidence" in the current executive leadership team. The other two were Executive Vice President and Chief Operating Officer Rob Brooks and Vice President of Patient Safety and Quality Pam Gordon.
Spiegel has been credited with leading Erlanger out of choppy financial waters, but he has also been caught up in a number of controversies, as the Times Free Press reported.
The legal tactics employed by hospitals are partly to blame for the rise of 'radical socialist ideas like Medicare for All,' the CMS administrator said.
After a slew of cringeworthy headlines about the payment-seeking legal actions healthcare providers have taken against their patients, Centers for Medicare & Medicaid Services Administrator Seema Verma criticized nonprofit hospitals Tuesday for employing such aggressive tactics.
Verma made the comments during a speech before a regional policy board meeting of the American Hospital Association, which represents nearly 5,000 provider organizations. And she linked the rise of so-called "Medicare-for-All" proposals to the public's rising awareness of how far certain nonprofit hospitals will go to squeeze the full list price from uninsured patients.
"These hospitals are referring patients to debt collectors, garnishing wages, placing liens on property, and even suing patients into bankruptcy," Verma said in her prepared remarks.
"This is unacceptable," she said. "Hospitals must be paid for their work, but it's actions like these that have led to calls for a complete Washington takeover of the entire healthcare system."
"The American people are demanding affordability, quality, and convenience, and the status quo isn't delivering," she added. "Radical socialist ideas like Medicare-for-All and the public option have lurked in the background of public policy for years. But their newfound prominence isn't based on their policy merits—it's because the status quo has failed to deliver."
Verma's comments come after a series of reports by major news outlets on how hospitals have pursued payment from their patients. The Wall Street Journal's Stephanie Armour reported in June on how nonprofit Mary Washington Hospital in Fredericksburg, Virginia, pursued an uninsured gardener over a $15,000 bill. The article cited a study of Virginia hospitals published in the Journal of the American Medical Association that found nonprofit hospitals were more likely than for-profits to garnish patients' wages.
Working with ProPublica, MLK50's Wendi C. Thomas wrote in June about the legal tactics of Methodist Le Bonheur Healthcare in Memphis, Tennessee. The Oklahoman published an article in August by Trevor Brown about the more than 22,000 lawsuits filed since 2016 by dozens of hospitals in Oklahoma against their former patients over unpaid bills. One hospital in New Mexico, Carlsbad Medical Center, made news for the thousands of lawsuits it has filed in the past four years, as Laura Beil reported in September for The New York Times. And the latest story came Monday in The Washington Post, with Jay Hancock and Elizabeth Lucas covering the financial disaster that struck a family after the University of Virginia Health System sued a couple and put a lien on their home over an emergency surgery bill. (That piece was also produced in coordination with ProPublica.)
The best path forward, Verma said, is to foster competition in the U.S. healthcare system by promoting price and quality transparency—echoing some of the sentiments she expressed in a recent interview with HealthLeaders about her approach to healthcare leadership.
The agreement marks the first of its kind since the HHS Office for Civil Rights launched its Rights of Access initiative.
After failing initially to comply with a woman's request for records about her unborn child, Bayfront Health St. Petersburg reached a settlement with the Health and Human Services (HHS) Office for Civil Rights (OCR) to resolve a potential violation of the law.
The 480-bed hospital in Florida paid $85,000 to HHS OCR and implemented a corrective action plan to ensure compliance with the right-of-access provision of the Health Insurance Portability and Accountability Act (HIPAA) rules, according to an HHS OCR announcement.
"We aim to hold the health care industry accountable for ignoring peoples' rights to access their medical records and those of their kids," said HHS OCR Director Roger Severino in the statement describing the settlement as the office's first enforcement action since launching its Rights of Access initiative.
Although providers are generally required to provide records within 30 days, Bayfront furnished the requested records more than nine months after the initial request was made, after HHS OCR launched its investigation, based on the mother's complaint, according to the announcement.
The woman had requested fetal heart monitor records, but Bayfront staff told her the records were not found, according to the resolution agreement.
A spokesperson for Bayfront told HealthLeaders in a statement that the hospital regrets and takes responsibility for the situation that led to the complaint and ultimate settlement.
"While we responded to the patient's record requests, clerical errors unfortunately caused a significant delay in fulfilling the entire request for records," the spokesperson said. "Delays in fulfilling requests for access to patient health information do not meet our service standards and we have sincerely apologized to the patient."
"All patients have a right to receive their medical records and we are committed to timely fulfillment of their requests," the spokesperson added. "Working with our release of information vendor, staff have been re-educated on processes, including escalation procedures when requested documents cannot be located. Our hospital has also added more oversight by Health Information Management staff of records requests and processing to ensure patients receive accurate records in a timely manner."
The corrective action plan includes a year of HHS OCR monitoring.
The agency finalized a rule to strengthen the government's ability to prevent fraud and block providers from federal health programs.
If your current or past business affiliates have been in hot water with federal health insurance programs, you may soon be required to give the Centers for Medicare & Medicaid Services a heads up, under a final rule the agency released Thursday.
The added program integrity requirements for providers and suppliers aim to empower the government to prevent fraud and block "unscrupulous providers" from federal programs before they can bilk the system, CMS said. The change is scheduled to take effect at the conclusion of a public comment period, on November 4.
The rule, which the agency proposed during the final year of the Obama administration, requires providers and suppliers that participate in Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) to disclose certain affiliations with other entities that have been formally excluded from any of those three programs, had payments suspended under a federal healthcare program, had their billing privileges denied or revoked, or have uncollected debt.
The rule also gives CMS more authority, in certain circumstances, to deny or revoke a provider's or supplier's permission to participate in Medicare.
"For too many years, we have played an expensive and inefficient game of 'whack-a-mole' with criminals—going after them one at a time—as they steal from our programs," said CMS Administrator Seema Verma in a statement. "These fraudsters temporarily disappear into complex, hard-to-track webs of criminal entities, and then re-emerge under different corporate names. These criminals engage in the same behaviors again and again."
"Now, for the first time, we have tools to stop criminals before they can steal from taxpayers. This is CMS hardening the target for criminals and locking the door to the vault," Verma added. "If you're a bad actor you can never get into the program, and you can't steal from it."
As an example of how CMS might use its new "affiliates" authority, the agency described a hypothetical situation in which it could deny enrollment in Medicare, Medicaid, or CHIP to an entity that is owned or managed by someone who is affiliated with another entity that had previously lost its enrollment status. This could help CMS prevent blocked providers and suppliers from rebranding and reentering the program under a new name.
Entities that are found to have submitted false or misleading information in an initial enrollment application may be blocked from the program for up to three years, according to the rule. The agency had been able to block revoked suppliers and providers from reentering Medicare for up to three years, but that blackout period will increase to a decade, according to the rule. A second offense may lead the agency to block an entity for up to 20 years.
The CMS announcement says "the only providers and suppliers that will face additional burdens are 'bad actors,' " but the American Hospital Association raised some reservations about the potential scope of the additional requirements, as proposed in 2016.
"[E]nrollment should not be put at risk for minor administrative errors, and providers should not be held responsible for reporting information that they have no ability to access or verify," AHA Executive Vice President Tom Nickels wrote in a comment at the time. "In addition, providers should not be required to report information prior to a final resolution of an appeal, nor should they be subject to a substantial new reporting burden for information to which the agency already has access."
The CMS administrator views her work as public service, aims to put patients in the center of the healthcare decision-making process, and hopes to curb healthcare costs.
To understand how Seema Verma, MPH, views her work steering the Centers for Medicare & Medicaid Services, you must step back and consider the history that shaped her worldview long before she was picked for her current job.
Before she was nominated as CMS administrator, Verma founded her own healthcare policy consulting business. Before that, she was vice president of planning for a public hospital system and a director with the Association of State and Territorial Health Officials. And before that, Verma earned a master's degree from the Johns Hopkins School of Public Health, having been raised in a family that values education.
Verma says her parents are Democrats who immigrated to the U.S. in the 1960s and taught her to think for herself. Doing so led her to form more conservative political views, especially as she gained firsthand experience working closely with the government, she says. Now, as she reflects with gratitude on her upbringing, private-sector career, and current role as CMS administrator, she describes her story as uniquely American.
"It's not lost on me what my life would have been if my parents hadn't immigrated," Verma tells HealthLeaders.
"They came here with absolutely nothing, and they saved every penny that they could to make sure that my sister and I had an education, that they could pay for that education, so we would have a leg up in the world," she says. "And they taught us simply to work hard and to aim high, to have goals, and to do whatever you had to do to achieve those goals. I could see the sacrifices they were making every day on our behalf."
"To think about where my parents came from, tiny villages in India, where in some parts of those areas indoor plumbing was a luxury, for them to come to this country, to have a successful life, to raise two kids, and for me to take on this job, I look at that as the epitome of the American dream," she says. "Where else in the world can that happen? Only here."
Verma and her husband, a child psychiatrist, have two children of their own now. Their home is in Carmel, Indiana, so Verma travels to and from Washington, D.C., frequently. The arrangement is taxing, but it's a sacrifice she and her family decided to make together, she says.
"I think that in everybody's life, there's an opportunity to give back. And that's what I'm doing here," she says. "It's not an easy job. I'm commuting back and forth. There are a lot of long, hard days. But the reason why I'm doing what I'm doing is about public service. And it's about giving back to this country that has given so much to me."
As she was sworn in as CMS administrator in the early weeks of Donald Trump's presidency, Verma looked forward to what she anticipated would be a highly productive team ready to turn the nation's healthcare system on its head.
"What I was really excited about was coming to work for this administration," she says. "What I saw was a leader, the president, who had essentially run against both parties. He was an outsider. And he was doing this because he genuinely wanted to improve the lives of the American people, wanted to make change."
'We Were All Disappointed'
Trump, like many other Republican politicians in the past decade, campaigned on opposition to the Affordable Care Act. Even though his party controlled both chambers of Congress for his first two years in office, President Trump managed neither to repeal nor replace the ACA. Lawmakers jockeyed over a series of bills but failed to reach an agreement. An early-morning thumbs-down from Sen. John McCain, R–Arizona, sank a so-called "skinny repeal" six months after Trump took office, signaling that the ACA would remain on the books for the time being.
"Obviously, I think we were all disappointed with the outcome of the healthcare bill," Verma says. "But that being said, I think we've stayed true to our commitment to improve the healthcare system. I think we've taken what we've had and tried to make things better."
It's true that Verma's team has pursued a transformative healthcare policy agenda within an ACA context. Some of the agency's boldest moves, in fact, such as those taken by the CMS Innovation Center, have relied on statutory authorization from the very law Verma herself has lambasted. But critics have argued that many of the changes Verma has championed are part of a long-running effort to topple the ACA by severing one root at a time.
There's no question the Trump administration has actively tried to scrap the ACA, through legislation and litigation alike. In a lawsuit pending before the Fifth Circuit Court of Appeals, the U.S. Department of Justice has argued Congress rendered the entire ACA invalid when it zeroed out the law's individual mandate penalty. But claims that the administration has tried to "sabotage" the ACA through CMS rulemaking, regulation, and guidance are false, Verma says.
"Despite all of the accusations, at the end of the day, premiums have actually gone down," she says. "We stabilized the market, and premiums have gone down. Satisfaction is at an all-time high in terms of the user experience and the Obamacare exchanges."
"I think we've stayed true to our commitment to improve the healthcare system. I think we've taken what we've had and tried to make things better."
—Seema Verma
One substantial way Verma has sought to sand off the ACA's sharp corners has been by increasing the flexibility CMS extends to states through Section 1332 waivers. The added flexibility—which the agency provided through revised guidance and reinforced with more detailed waiver templates—includes a looser definition of what qualifies as "coverage," and it could be used to subsidize short-term limited-duration insurance, which is often a cheaper option because it isn't required to meet all of the ACA's coverage requirements.
That added flexibility stoked concerns that broader Section 1332 waivers could undermine the market for ACA-compliant plans. Verma, however, says opening up competition lets people make the best choice for themselves and lets states lead their own health plan problem-solving.
"In the absence of a federal solution, I felt like it was our role to empower states to create solutions that are going to work better in their markets, with the idea of lowering costs, providing more flexibility and more choices," she says.
'Skin in the Game'
It might be tempting to cast Verma as the ACA's antagonist, to frame her work for the Trump administration as primarily opposing the Obama-era law, to treat her like the GOP lawmakers who campaigned for nearly a decade on promises to supplant the ACA with something better, only to falter when their time came. To cast Verma in such a flat role, however, would oversimplify her history and her vision.
Years before the ACA's passage, Verma began earning her clout in conservative circles by advancing state Medicaid policies built on principles of competition and personal responsibility. Those themes echoed through her subsequent consulting work in an ACA context, and they are evident today in her priorities as CMS administrator.
Verma is credited as the architect of the Healthy Indiana Plan (HIP), which the Hoosier state adopted for its Medicaid program beginning in 2008. Modeled after a high-deductible health plan and health savings account, HIP promoted personal responsibility by giving beneficiaries "some 'skin in the game,' " as Verma explained in a Health Affairs article she coauthored with the secretary of Indiana's social services administration. The program required beneficiaries to contribute 2%–5% of their income, up to $92 per month. Those who failed to pay within two months were locked out of coverage and blocked from reapplying for a full year.
After the ACA's passage, Verma helped Indiana devise HIP 2.0, which incorporated Medicaid expansion into the state's program. And she helped other states devise their own Section 1115 Medicaid demonstration waiver projects through her consulting firm SVC Inc. Although the details varied, this idea of promoting personal responsibility is evident in the waivers Verma helped several other states devise, including Iowa, Idaho, Michigan, and Tennessee, according to a KPMG profile of her work.
Verma tells HealthLeaders that this idea of beneficiaries having "skin in the game" is about empowering them to make their own healthcare decisions in a market-based system.
"I think it brings patients into the centerfold of the whole discussion around healthcare," she says.
Beneficiaries of the HIP program who made their financial contributions, as required, also made better healthcare decisions, Verma says.
"They used the emergency room less. They used more preventive healthcare services, and they had better drug adherence," she says. "So we actually saw quality improve and health outcomes improve when people were more invested in their care, when they valued the care that they were getting."
This strings-attached approach to Medicaid is especially evident in Verma's advocacy for Medicaid work requirements. The administration has approved such requirements in at least nine states, including three approvals that have been blocked by a federal judge, who ruled that Health and Human Services had failed to fully consider the possibility that many beneficiaries would lose coverage as a result of such policies. An appeal is pending.
Verma argues, however, that work requirements align with a "whole person" approach to healthcare.
"There's a lot of discussion about the social determinants of health, and in order to improve health outcomes, we have to look at the person holistically and address those social issues," she says. "Part of that is finding employment."
'Create a Competitive Environment'
While past administrations had CMS focus on one or two key priorities at a time, Verma says, the Trump administration has already notched a long list of accomplishments—from simplifying reporting requirements to rolling out potentially transformative payment models, promoting interoperability of patient health information, implementing site-neutral Medicare payments, overhauling Medicare accountable care organizations, and more.
"What's been different about this administration and this CMS is we're activating the entire agency to deliver change and to improve outcomes," she says.
Looking ahead, Verma says one of the agency's big overarching priorities is figuring out how to curb healthcare costs.
"A lot of the discussion that's going on in D.C. now, and even with the healthcare bill, was about who pays and how much in subsidies. But really at the end of the day, the discussion needs to turn to how much we're paying for healthcare," she says. "We pay more than any other country pays."
"I think if we're going to address healthcare issues, seriously address healthcare issues, that's what we need to be focused on," she says. "There's not a silver bullet. It's a multi-tiered strategy, a multiprong strategy."
At the center of her strategy is a fundamentally conservative belief in the virtues of a free market—one in which consumers are empowered with the information they need to make cost-informed decisions about their care.
"Generally, I would say our approach is to create a competitive environment, where providers can compete for patients on the basis of cost and quality, that they are incentivized to innovate, to drive value in the system," Verma says.
"We're not afraid to disrupt the system," she adds. "We're not afraid of the entrenched special interests. We're about doing what's right for patients."
A report commissioned by the American Hospital Association purports to demonstrate the benefits healthcare consolidation brings to patients.
Displeased with the numerous studies that have shown mergers among healthcare providers tend to lead to higher costs, the American Hospital Association released its own report Wednesday to defend the rapid consolidation in which its members have participated.
The report, which updates a previous iteration that AHA released in 2017 with similar findings, includes information derived from interviews with hand-picked leaders from health systems that have participated in some form of acquisition or affiliation. It also analyzes the financial impacts of hospital mergers, which AHA President and CEO Rick Pollack said are a valuable tool as the industry metamorphosizes.
"Mergers have become one of the critical means through which hospitals can provide their communities with high-quality, convenient and cost-effective care," Pollack said in a statement. "The benefits of mergers allow hospitals to create connected networks of care and keep the focus where it belongs: on improving care for the patient."
The report says hospital acquisitions benefit patients by leading to "better care at reduced cost." Rather than directly studying the cost shouldered by patients and payers, however, the report used changes in hospital revenue as a proxy. Revenues per admission at acquired hospitals fell a statistically significant 3.5% compared to non-merging hospitals, according to the report. "These results suggest that savings that accrue to merging hospitals are passed on to patients and their health plans," the report's executive summary states.
The report also found that hospital acquisitions reduced annual operating expenses by a statistically significant 2.3% at acquired hospitals and improved key quality metrics on readmissions and mortality.
Hospital mergers are about efficiency, not market power, Pollack said.
A group of academics who hosted their own webinar Wednesday after the AHA's report was released, however, pointed to several studies that affirm conventional wisdom: that consolidation leads to greater negotiating leverage and that post-merger entities use that leverage to their financial advantage.
Leemore Dafny, PhD, a professor of business administration at the Harvard Business School and former deputy director of healthcare and antitrust in the Bureau of Economics at the Federal Trade Commission, cited her research during the webinar that shows health systems in separate metropolitan areas tend to raise prices when they merge.
Zack Cooper, an associate professor of public health and economics at Yale University, cited his research based on commercial insurance claims data as showing that hospitals facing less competition demand higher prices and contracts that favor them. He also pointed to research published last year by RAND Corp.
Not all healthcare consolidation is necessarily bad, but regulators should rigorously review proposed transactions on a case-by-case basis, the academics argued.