Hospital Mergers: A Result of Health Reform?

Hospital mergers are the latest trend in health care.

But far from a passing fad, the number of mergers and acquisitions are expected to rise as health systems adjust to the federal health care reform.

Locally, St. Benedicts Family Medical Center in Jerome announced last week it was discussing joining with St. Luke’s Health System. Many of the details of the deal have not been released, but one of the reasons spurring the merger is health care reform.

“For St. Luke’s, acquiring St. Ben’s has everything to do with reform,” said David Pate, chief executive officer of St. Luke’s Health System.

Under the Patient Protection and Affordable Care Act, health care systems will be required to reduce costs and improve their quality of patient care. However, this becomes difficult when hospitals face expensive technological upgrades paired with shrinking private and public reimbursements.

To find new ways to bear the costs, independent hospitals have increasingly signed on with larger health systems in the past year.

There were 27 merger deals across the nation in the second quarter of 2011, up from nine for those months of 2010, according to Irving Levin Associates, a health care industry merger and acquisition data publisher.

Partnering with a larger hospital affords providers more resources and distributes costs across both entities.

“Health care reform law is accelerating a trend that was already developing,” Pate said.

The reform puts financial incentive on preventive care actions. Unlike in the past, doctors will get paid for value, not volume.

St. Luke’s will benefit integrating with St. Benedicts because it will be able to coordinate care between the Twin Falls and Jerome areas, Pate said.

“Now it’s not just patients in our hospitals, but looking at the whole population and seeing how do we promote health,” he said.

Though some fear the changes resulting from health care reform will lead to employee layoffs as providers seek to meet costs, St. Luke’s will only consider cutting jobs as a last resort, Pate said.

“We feel especially sensitive to this issue. We are the largest employer in the state and we help drive the economy,” he said. “It’s important we recognize our role in the economy. We have the opportunity to look at care processes and find how we can prevent avoidable complications and preventable hospital admissions.”

Source: MagicValley.com