CHICAGO, September 16 — Nearly 60% of hospital patient days in the United States are attributable to Medicare, Medicaid and Medicare Advantage beneficiaries, and that single figure sits at the center of a new American Hospital Association report arguing that merger reviews are asking the wrong questions. The report, prepared by healthcare consulting and analytics firm Kaufman Hall for the AHA, contends that federal and state reviews of hospital mergers and acquisitions should look beyond the potential impact on commercial insurance prices.
Because government programs set payment rates administratively for the majority of patient days, the report argues, a review focused narrowly on commercial pricing does not capture what a proposed transaction means for all patients served.
What the report found
Drawing on analyses of challenged and canceled transactions, Kaufman Hall found that hospitals seeking partners often serve more vulnerable communities and face greater financial pressures. It also found that when proposed deals do not move forward, struggling hospitals can experience significant financial deterioration that threatens services, workforce stability and access to care. That second finding is the one the AHA wants regulators to weigh.
The report’s central recommendation is that merger review incorporate the effects on Medicare, Medicaid and Medicare Advantage patients, whose rates are set administratively, alongside the consequences of blocking a transaction that a financially stressed hospital says it needs to sustain services.
The report’s conclusion states that “a more comprehensive analysis of hospital M&A transactions, one that considers impacts on all patients served, broadens the focus to impacts beyond pricing, and considers the consequences if an M&A transaction is not permitted to proceed, would ensure not only competitive but also healthy hospital markets that can continue to provide the fullest possible range of services.”
Why it lands now
The report arrives amid continuing national debate over hospital consolidation, as federal antitrust agencies and state regulators weigh how proposed hospital transactions affect prices, access and community health. Investors will note the timing: the AHA is pressing its case while the review framework itself is in play. The AHA is a national organization representing hospitals and health systems.
Kaufman Hall regularly produces data and analysis on hospital finances and transactions. The association published the report and an accompanying blog post on its website, www.aha.org.
On the association’s terms of use, AHA Institutional Members, their employees, and State, Regional and Metro Hospital Associations are granted permission to use original AHA content for noncommercial purposes unless otherwise indicated. The AHA states that it does not claim ownership of content created by any third party, including content incorporated by permission into AHA-produced materials, and cannot grant permission to use, distribute or otherwise reproduce such third-party content. Requests to reproduce AHA content are directed through the association’s permission process.
What to watch next is whether regulators take up the report’s proposed framework. Any shift toward weighing the consequences of blocking a deal — not just the pricing effects of allowing one — would change how hospital transactions are assessed from the first filing onward.
