While larger health systems tend to tout the supposed benefits of consolidation, cross-market mergers in particular could be leading to higher prices and potentially lower quality of care, according to an Aug. 23 KFF report.
Such cross-market transactions are defined in the report as a merger between two healthcare providers that operate in different geographic markets, whether such markets are relatively close to each other or thousands of miles apart. In addition, a larger health system could acquire locations in markets where it doesn't operate, such as the recent purchase of the Gerald Champion Regional Medical Center in New Mexico by Irving, Texas-based Christus Health.
Up to now, such mergers have received little resistance from regulators, the report said. Proponents say such deals can help smaller hospitals struggling with their finances or can lead to improved expertise as systems share best practices.
Critics argue that such cross-market mergers have led to price increases ranging from 6 to 17 percent and that there is a subsequent lessening of community focus after such transactions.
There is an increasing focus in some state legislatures about such mergers, with more transparency requirements beginning to be signed into law, according to the report.
"As the number of cross-market mergers increases, these concerns and tradeoffs are likely to be on the radar of policymakers and regulators," the report concluded.