Hospitals are merging faster and in greater numbers than they have in years. After holding steady through much of the 2000s, the number of deals doubled to 105 in 2012 from 50 in 2009, according to Irving Levin Associates, a health care research firm. That is still less than half the annual peak during the last merger wave, in the late 1990s, but [consulting firm Booz & Company] and others say this is only the beginning.
Booz has even predicted that 1,000 of America’s 5,000 hospitals could combine in the next few decade. The causes of this trend are complex. The NYT article notes that the ACA has a hand in incentivizing consolidation, but that certainly isn’t the only factor. Others include reduced patient admissions and lower cash flow from the federal government.An era of systemic consolidation is bad news for a lot of reasons. Insurers will have less power to bargain for lower prices, and doctors will be forced to work for big firms rather than their own practices. And it will hit consumers where it hurts: “’The rhetoric is all about efficiency,’ said Karen Ignagni, the chief executive of America’s Health Insurance Plans, a trade group that represents insurers. ‘The reality is all about higher prices.’”Any reform aimed at lowering health care prices has to take this trend very seriously—and carefully think through how to counteract it.[Photo of stethoscope and money courtesy of Shutterstock.]