Health Care Costs Seen As Concern By Regulators With Rise In Hospital Mergers

An uptick in hospital mergers is grabbing the attention of federal regulators, who are sounding alarms about potential increases in health care costs.

Though some mergers can create leaner, more efficient systems that lower costs, others can dampen competition, reduce choice and send prices upward. That's the Federal Trade Commission's concern in Albany, Ga., where the only two hospitals in town decided to merge in 2010. The regulators are considering a Supreme Court challenge to the merger, said the Federal Trade Commission's chairman, Jon Leibowitz, during a visit to The Huffington Post newsroom in New York.

"If this hospital merger is allowed to go through, it's going to give a blueprint for how to design the most anti-competitive outcome that will raise health care costs for every consumer in rural areas and small cities, and that will be a huge problem for all of us," Leibowitz said.

The FTC already lost a round in court last year against Phoebe Putney Health System, a nonprofit network of facilities run by the Albany-Dougherty County Hospital Authority, which is acquiring Palmyra Medical Center from HCA, the largest for-profit hospital chain in the United States. The $198 million deal closed in December and the facilities are in the process of combining their operations.

Hospital mergers are on the rise as chains seek to increase market share, exert leverage against insurance companies and reduce expenses. President Barack Obama's health reform law is driving some of this activity. The law cut $155 billion from Medicare's payments for hospital services and encourages medical providers to streamline operations and collaborate more. "You can have some consolidation that can be pro-competitive," Leibowitz said.

Regulators have been examining hospitals beyond Albany. The Federal Trade Commission also waged a battle against a merger in the Toledo, Ohio, area and is weighing the effects on competition in the health care marketplace of a slew of deals across the country between hospitals, physician practices and other entities, The New York Times reported last year.

Hospitals that operate in regions with less competition are able to charge higher prices and enjoy bigger profit margins, University of California, Berkeley health economist James Robinson concluded in a study published in the American Journal of Managed Care last year. Robinson and his fellow researchers compared prices for six surgical procedures including joint replacements and found hospitals that dominate local markets charge more than comparable facilities in more competitive areas.

When a Catholic hospital system expands to acquire a facility that hasn't previously had this type of affiliation, women may encounter obstacles to obtaining reproductive health services, including contraception, sterilization and abortion, that run afoul of Roman Catholic Church teachings, The New York Times noted in a recent story. Democratic Gov. Steve Beshear of Kentucky halted one such deal last year.

Bianca Bosker contributed to this report.

Comments

[MetaMD]

10:01 PM on 03/05/2012

We have allowed large medical service entities to convince regulators that they provide superior service over the old fashioned smaller entities (for common illnesses, not specialty services)...We are all impressed with these "medical cities"that have sprouted up, not realizing that somebody (we the ultimate payers) is being gouged. We don't need a cruise ship to cross the river. We don't need layers of observing technocrats to approve that treatment for that ear infection or rash. The current system only serves to maintain the dominance of "suits" over "white coats". Since when can front-line "providers" not be trusted to give good care? As long as we consumers are not paying for care directly, the third-party payer will have power over us and maximize profits only for the managers.

[JoeMomma]

02:03 AM on 02/24/2012

I refuse to pay into this totally corrupt system. Not a penny to insurers.

[dadw5boys]

11:07 PM on 02/23/2012

They have Consolidated all the Hospitals around here into only 2 Corporations that rule. Both have major issues providing Medical Care and outragous fees.

[dadw5boys]

11:03 PM on 02/23/2012

Another thing I learned is "Do Not Believe Anything Someone from the Billing Office Tells You ".
Someone came to my mothers room at the Rehab Hospital and told her everything was covered for her 2 Week Stay in the Rehab Hospital . Mom was only going to stay for the 5 Days Doctors had orginally ordered before she arrived and someone extended her stay on paper.
It was not infact None of the Physical Therapy cost had been approved by the Insurance Company. Only part of the Room and Board was covered 5 days exactlly.
When ask why they told her everything was paid for they said " the girl had bad information" !
I told them "The Girl needs to pay for her mistake". They laughed and walked away ! I was dead sersious.

[dadw5boys]

10:57 PM on 02/23/2012

One lesson I have learned it to " Know your Deductables " and be preapred to pay them the day your hospitalized or someone you care for. My mother was hospitalized and I forgot to pay the deductables the day they admitted her or soon after. Before I knew it the Hospital and Insurance Company had screwed around claiming one make a mistake then the other in billing and 90 days had passed. The very day she got a final bill from the Hospital they sent it to collections.
So don't wait to pay those deductables !

[jcaunter]

08:35 PM on 02/23/2012

I don't care anymore. I've long recognized that this system is unsustainable and primed for collapse. Here is just another naiI driving that fact home.

[loki]

05:02 PM on 02/23/2012

I have a good friend who ran the medical and billing department of a large hospital chain in Iowa, and now runs one here in Missouri as well as teaches M&B part time at a state college. She was telling me ones that hospitals construct more patient rooms not to meet demand, but because the amount they can get from Medicare/caid per room, is partially determined by the amount of beds the institution has. Its worth the cost of adding 100s of rooms in other words even if those rooms will never see a patient, because they increase the amount they can charge for the rooms that do see patients.
Now that is just wrong, but thats a loophole some smart attorneys and accountants found she said, and the corporations who own hospitals abuse the heck out of it, and lobby to keep it from being closed. Yeah, Capitalism like we have today is just dandy isn't it.. They pay millions to have experts read over every detail of the laws to find an opening, then they set their fangs in, and pay millions more to make sure that unintended loophole never gets closed.
So a Burglar can slip in through a window you forgot to unlock, take everything and its ok. Then , they can pay people to make sure you never lock the window, and come in daily to rob you. And its all legal cause you left the window open to being with????

[olerealist]

04:47 PM on 02/23/2012

This comment is inspired by the following:

Analytics and the future of healthcare
January 30, 2012 | Peter Horner and
http://www.healthcareitnews.com/news/analytics-and-future-healthcare

Anyone who is not aware that the current cost of delivery of health care and its accoutrements is not sustainable must be wearing double blinders.

In the civilized world there are probably only two countries who have a worse health status than US of A are Somalia and Bangladesh. The same applies as to the cost per patient per annum.

Accordingly, it is our view that notwithstanding all the clamor over affordable health care law, the issue may gradually become less relevant.

Our reason for this optimism is that while the norm has been that we have tended to have a relationship with our physician which is very much like one with a brother in law or uncle.
We liked to close our eyes to the fact that his professional inefficiency and gigantic fees are forcing our health premiums to skyrocket.

But finally people are beginning to take off their blinders and see the facts. Our rich uncle, Dr. Ed, is going to have to deal with it. It is reform or the highway. This trend is the reason for the enormous expansion of care systems like Kaiser Permanente. Likewise, the hospital executives and CEO’S had better start getting used to those huge annual bonuses shrinking along with the shrinking “bottom line”.

[rosiebag]

01:29 PM on 02/23/2012

Impossible I've got Barrycare.

[loki]

05:03 PM on 02/23/2012

Not the greatest, but its better than Corporate care

[Elsa Weber]

01:25 PM on 02/23/2012

Hospitals are already dangerous places. They are understaffed, have extremely high infection and medical mistake rates, patient abuse is on the rise and they provide all that while continuing to raise the costs of their services. I think allowing them to grow bigger than they already are will only add to this. At this rate it will not be long until our hospital system goes back to the death trap it was before and during the 1920s, with one added factor - the failure will be due to the Coporations filling their pockets rather than the lack of knowledge on the part of the physicians.

[mfitz11]

12:45 PM on 02/23/2012

Can someone explain this to me:
In American I earn a decent salary and pay $700 per month to insure my family (with company covering most of the costs) and receive what I feel is poor quality healthcare.

I lived in Australia for four years, earned a higher salary, paid less in taxes than I am paying now and had free healthcare which I found to be a better quality then what I have seen in America.

Now, how is that possible?

[3RawBob]

03:10 PM on 02/23/2012

Wait a few years until Obamacare kicks in. The emphasis will be on keeping you healthy; but if you get sick or have an accident, the goal is to get you healthy as soon as possible.
If the Republicans stopped blocking reform, the cost should go down considerably.

[Rider3]

05:09 PM on 02/23/2012

If I were you, I'd have chosen to stay in Australia. The U.S. is run by a bunch of greedy, evil men who would throw their mother under a bus if it would put a dollar in their pocket. This country is an embarassment these days when it comes to taking care of its citizens.