Hospital consolidation is happening faster than ever in NYC. At least a dozen smaller hospitals have joined up with larger systems since 2011, with similar numbers in New Jersey as well. As the WSJ points out, the pace of consolidation is driven by the ACA—and could be very bad news for consumers:
The rash of activity in the New York region echoes the broader industry’s struggle to cope with declining government reimbursements and the federal Affordable Care Act, which includes aggressive mandates for improved quality and efficiency. […]Price increases often exceeded 20% when mergers occurred in concentrated markets, according to a 2012 Robert Wood Johnson Foundation report on hospital consolidations nationwide.One reason, say hospital CEOs, is that additional patients give them better bargaining power with insurance providers. In turn, insurers say customers could face higher premiums.
Meanwhile, hospitals are already raking in the profits as the newly insured flock to ER rooms and maternity care at a far greater rate than they seek out private practices and clinics. And since ER rooms and hospitals are more expensive by far, payout costs have been much higher than expected for both insurers and employers. Some have even gone so far as to call the public exchanges “unsustainable.” As more doctors join hospitals to escape the ACA’s red tape and low reimbursement rates, and more hospital consolidate in order to demand rate hikes from insurers, the losers in this equation will be the consumers. The perverse incentives of the ACA are on display again. Affordable, indeed.