Hospital Merger Benefits: Views from Hospital Leaders and Econometric Analysis - An Update: Perhaps the most widely cited report in healthcare news of the past couple days is this American Hospital Association study about the effects of hospitals mergers, conducted by economists at the firm Charles River. Below are their findings with commentary.
“Acquisitions decrease costs due to the increased scale of the combined system and the data-driven clinical standardization that can be realized. Consistent with our previous analysis, hospital acquisitions are associated with a statistically significant 2.3% reduction in annual operating expenses at acquired hospitals…”
This finding has face validity since mergers take advantage of economies of scale
“At the same time, quality is enhanced: our new empirical analysis shows statistically significant reductions in rates of readmission and mortality. This is consistent with health system leaders’ reports on their extensive efforts to use their systems’ data to develop clinical best practices and hold hospitals accountable to measurable outcomes in ways that require scale and resources that individual community hospitals may lack…”
Interpretation of this finding is a bit more complex. The authors compared differences between merged hospitals and unmerged hospitals using a “differences in differences” analysis. However, the characteristics of institutions that merge or are attractive for merger were not studied, e.g., unique location, financial health, local labor pool, etc. These characteristics could account for these differences. Also, some of the outcomes they use have been recently questioned. For example, extended ED or observation stays have substituted for readmissions (see previous blog post). This criticism is somewhat mitigated by the fact that the authors combine outcomes into composite indices.
“Revenues per admission at acquired hospitals also decline relative to non-merging hospitals by a statistically significant 3.5%. These results suggest that savings that accrue to merging hospitals are passed on to patients and their health plans…
While not solely a measure of prices negotiated by hospitals and health plans, we would expect (all else equal) revenue per adjusted admission to increase if negotiated commercial or Medicare Advantage prices increased following an acquisition. However, since changes in revenue per adjusted admission may also be affected by changes in payor mix or service mix, results involving this measure should be interpreted with care[emphasis added].”
In addition to this caveat must be added many well-done economic studies that show mergers increase healthcare costs.
Above all, the healthcare environment is changing so results may continue to evolve.
For more background see the text chapters on Hospitals and Healthcare Systems as well as Quality.
About healthcare IT
Prompt notification eases pain of data breaches, consumers say: Frank and prompt discussions with patients when medical errors occur is the preferred method of disclosure. The same seems to be true about data breaches. According to a recent Experian survey: “Some 90 percent of the survey respondents said they would be at least somewhat more forgiving of an organization if they knew it had a prior plan in place for communicating after a data breach.”
Need birth control? Planned Parenthood says there's an app for that: “Weeks after a high-profile exit from Title X, Planned Parenthood has launched a mobile app designed at providing birth control and urinary tract infection (UTI) treatment to women struggling to find time and resources to make it into a clinic.” The app is called Planned Parenthood Direct.
About the public’s health
Associations of Aerobic Fitness and Maximal Muscular Strength With Metabolites in Young Men: What is the best exercise to promote cardiovascular health? Aerobic exercise beats weight training in this study.
Regional Variation in the Association of Poverty and Heart Failure [HF] Mortality in the 3135 Counties of the United States: “County poverty is the strongest socioeconomic factor associated with HF and CHD [coronary heart disease] mortality, an association that is stronger with HF than with CHD and varied by census region. Over half of the association was explained by differences in the prevalence of diabetes mellitus and obesity across the counties.”
“HF mortality increased by 5.2 deaths/100 000 for each percentage increase in county poverty prevalence…”
Facebook Debuts Vaccine Pop-Up Windows To Stop Spread Of Misinformation: Facebook is joining other firms that have popups of legitimate websites when users search on vaccination information.
Oregon death is 2nd linked to vaping, 1st tied to pot shop: As illness spreads from vaping, the second death has occurred, this time in Oregon.
Contaminant found in vaping products linked to deadly lung illnesses, state and federal labs show: In a related story, the chemical now identified as the cause of this vaping illness is an oil derived from vitamin E.
Nearly 30 Texas-based hospitals sue J&J, Purdue, CVS and more over opioid epidemic: 30 Texas-based hospitals have joined governmental agencies in suing manufacturers and suppliers over the opioid epidemic. No doubt other hospitals will follow in other states.
Opioid Prescribing After Surgery in the United States, Canada, and Sweden: Researchers in Canada, the US and Sweden found that “the United States and Canada have a 7-fold higher rate of opioid prescriptions filled in the immediate postoperative period compared with Sweden. Of the 3 countries examined, the mean dose of opioids for most surgical procedures was highest in the United States.” There is more blame to go around for the opioid problem aside from the pharma companies.
About health insurance
Court again blocks Medicaid work requirements, this time in New Hampshire: HHS’ work requirements for Medicaid eligibility have not been upheld in the courts. The latest example is in New Hampshire.
IRS says reinstating ACA insurance tax would cost insurers $15.5B in 2020 [Modern Healthcare, subscription required]: When the ACA was passed, there was a provision for insurance companies (among many other healthcare entities) to pay a certain amount to finance the provisions of the law. Although the the insurance company tax has been on hold, CMS plans to implement it next year. The IRS says the tax will cost insurers (or benefit the federal government- depending on your view) $15.5 billion in 2020. Premiums have been moderating, but this tax may cause insurance companies to rethink their rates.
US judge approves CVS purchase of insurer Aetna: Several critics of the merger, including the AMA, sued to undo what the Justice Department had OK’d. Judge Richard Leon of U.S. District Court for the District of Columbia approved the sale yesterday. No word on appeals.
California's Medicaid expansion led to fewer evictions: The headline explains another benefit to Medicaid expansion— this time a non-medical one.
US Physicians’ Reactions To ACA Implementation, 2012–17[Health Affairs- subscription required but the abstract is available on this link]: “More physicians agreed in 2017 than in 2012 that the ACA ‘would turn United States health care in the right direction’ (53 percent versus 42 percent), despite reporting perceived worsening in several practice conditions over the same time period. After we adjusted for specialty, political party affiliation, practice setting type, perceived social responsibility, age, and sex, we found that only political party affiliation was a significant predictor of support for the ACA in the 2017 results.”
This type of reversal in support for such a program is not new. For decades, “organized medicine” was vehemently opposed to national health initiatives prior to enactment of Medicare in 1965. After its implementation a year later, opinions changed dramatically and have been persistently positive—despite operational criticisms.