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Hospital Consolidation

Posted on January 10, 2013 I Written By

John Lynn is the Founder of the blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of and John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

There are a number of trends happening in healthcare right now that are hard to ignore. Plus, they are going to absolutely change the dynamics of healthcare as we know it. I think one of the biggest trends we’re seeing is the healthcare consolidation.

Healthcare consolidation is happening as hospitals come together and as hospitals buy up physician practices. I’ve heard some people argue that soon we’ll only have about 15 companies that own all the hospitals in the US. That seems pretty aggressive, but I think consolidation will likely amount to that many major ones with some minor ones in areas where the major corporations don’t really care.

In a lot of ways, consolidation of hospitals can be a great thing. Consolidation can often mean a lot of cost savings for the hospitals since you can merge departments and gain savings. Plus, your buying power is larger and so you can get the same goods at a lower cost. As we continue to move towards the ACO world consolidation can be a good thing as well since you need everyone involved to make an ACO a success. What better way to get them involved than to have them all in one company?

Also, if all the hospitals are under one company, then it makes for easy exchange of healthcare data between hospitals. Oh wait, for some reason healthcare still hasn’t figured this one out (Yep, we can’t even share healthcare data within a private HIE very well). Maybe this will change.

While there can be many benefits to hospital consolidation, there can also be a number of huge challenges. What if a doctor works for a hospital and they hate the EHR (or insert other reason as you see fit) that the hospital uses? If the hospital system owns all the hospitals in that area, then the doctor doesn’t have much choice. Same goes for a patient who wishes the hospital provided more advanced services. They’ll try to go to the hospital across town and find that it’s the same company and the same processes.

At that point, what incentive does the hospital system have to really truly improve? Sounds like a monopoly waiting to happen to me.

I asked someone how we stop the hospital consolidation. He said, “We don’t.” It’s a fast moving shift that can’t really be stopped. So, we just need to learn to adapt to the new environment.

It will be interesting to see how the EHR world plays out with hospital consolidation. Is a hospital system going to force a certain EHR on their acquired hospitals so they have one EHR to serve all? I bet the answer is they’re likely going to have a number of EHR software in every hospital system. This is going to require a change in mentality for many.

Hospital M&A Getting Tough (But Misguided) Scrutiny From Lawmakers

Posted on November 7, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or

As us in “the biz” know, the pace of hospital M&A isn’t going to slow down anytime soon. Hospitals are huddling together to scale up for countless reasons.

The reasons for hospital consolidation are just about unstoppable, of course, as they include  a) well-founded fears regarding reform, b) trouble carrying the capital capital costs involved in scaling up health IT infrastructure, c) long-term trends squeezing hospital margins and d) the need to participate effectively  in ACOs, HIEs and other alphabet soup organizations.

Unless the government takes over the entire healthcare system and spends these factors away, they’ll push execs into the arms of their peers regardless of what federal policies roll out.  Yes, the FTC can put mergers on hold, and notably, has gone medieval on a few mergers just to prove it can, but let’s not pretend it has the resources to slow hospital consolidation dealflow much either.

So, I must say I was sort of amused to learn that members of the  House Ways and Means Subcommittee on Health took a  stern look at hospital dealmaking and consolidation last month.  You know, to me it’s like standing in a flooded basement in a rainstorm and focusing on a few cracks in the wall — but I digress.

At the hearing, an economics and health policy professor named Martin Gaynor testified that consolidation was picking up speed. He also asserted that studies show hospital prices going up meaningfully whenever hospital markets consolidate.

Geez, Professor Gaynor, you say that like it’s a bad thing! Doesn’t classical economics allow for the supply side folks to work together too, without breaking the system? Whoops, I digress again.

The hearing, which took place in September, also included data from a Rand Corp. study noting that health plans were consolidating dramatically, and that these mergers were giving health plans too much power.  (Wow, imagine that — health plans having too much power?)

Oh, Lord, why does all of this seem beside the point?  Well, probably because it’s not going to help anyone.  Sure, knowing  what impact hospital M&A is having is part of a well-informed Health Subcommittee’s job description.  And I appreciate that the Subcommittee is trying to look at the bigger picture, one which includes both health insurers and hospitals.

But hearings like this, which assume that pricing indicators are the best way to decide whether the public good is being served, strike me as painfully uninformed. While I’m no economist, I have seen a few deals come and go, and some ill-considered attempts to control dealflow too. After following the health market for decades, I’m convinced that playing Whack-A-Mole and slapping down those “bad guys” who are overcharging/underpaying gets us nowhere.