Beauty, the old proverb tells us, is in the eye of the beholder. You could say the same about hospital mergers.
Some say they only raise prices, reduce choices for patients, and cause the quality of care to drop. Others, often the hospitals themselves, say these mergers are the last resort to maintain competition against large health insurance companies and bring down administrative costs. A new team of health care researchers might finally be able to help us distinguish good mergers from bad ones, see how the health of Virginia’s health care market compares to other states and uncover new ways to improve health care affordability in the commonwealth.
Why is health care so unaffordable in the United States? The experts say it’s not because we use more care than other countries. In fact, we use less. What sets us apart is that the price we pay for nearly everything in health care is astronomically higher. And one of the biggest drivers of prices is hospitals. According to researchers at the new Yale Health Care Affordability Lab, the hospital sector makes up nearly a third of all U.S. health care spending, and, since the year 2000, hospital prices have risen threefold, faster than physician services or even the prices of prescription drugs.
But maybe this spending growth on hospitals is a good sign. After all, hospitals are often an anchor for care, and employment, in their communities. Rates of cancer deaths and death by heart disease have dropped in the 21st century as new technology and therapeutics have sprouted up in our nation’s hospitals, and while hospitals themselves employ about 6.5 million Americans, the ripple effects of the goods and services they use mean about 16.5 million Americans have work. How do we know when spending growth in hospitals is a sign of progress or profiteering?
The team at the Yale Health Care Affordability Lab may have found a way to distinguish good mergers from bad ones, and it could help Virginians trying to make health care more affordable. They’ve built a data visualization to illustrate how mergers, ownership changes, closures and rising market concentration have quietly reshaped hospital markets across the country. It can drill down to each individual merger across the country — showing how much they reduced competition in the market, and thereby, how monopolistic and risky they are for patients. It can even assess future mergers, forecasting how patient choice and access would be affected by a hypothetical merger or acquisition of a hospital years from now.
When it comes to Virginia, the commonwealth is doing “meh.” We have plenty of room for improvement. Specifically, we rank 22nd out of the 50 states in the percentage of hospitals that are either highly concentrated or effectively a monopoly. We’re not in the bottom half, but we’re still almost ten percentage points higher than neighboring Tennessee and twice as high as Maryland.
There are a few things we can do to start closing the gap. Virginia, like Tennessee, allows the legislature to approve hospital mergers — especially when they affect underserved areas. This is helpful to protect patients, but perhaps to improve scrutiny and caution, data from the Health Care Affordability Lab can provide a threshold at which the Attorney General’s Office can more closely, and publicly, scrutinize the effects of a proposed merger.
Research organizations and policy experts in the legislature and Administration, especially Gov. Spanberger’s new Health Financing Task Force, could use this data to provide more detailed assessments of the health of Virginia’s hospital markets, or revisit Certificate of Public Need laws that currently govern hospital expansion, especially as Republicans’ Medicaid cuts take effect over the next few years.
But the biggest solution to this issue lies with the voters. Last year, Republicans in Congress passed a bill that will cut around a trillion dollars out of Medicaid over the next decade. That means more patients will need care who can’t pay for it, and others will wait to get care until their conditions become unbearable and expensive. All of that will drive up costs for hospitals without increases in revenue, forcing many more to consider drastic measures like mergers, acquisitions and eventually, closures.
In this fall’s midterm elections, voters should send legislators to Congress who vow to reverse those cuts. We should all hope for a health care system that is made more affordable the right way — because the people who deliver care are paid sufficiently for helping people stay healthy, not because some lawyers won a shady shell game of complex financial and legal maneuvers. Better data can help us find our way to that kind of health care system here in the commonwealth, and around the country.
Brian Chiglinsky, a native of Salem, is a health care communications consultant and was the former director of speechwriting at the U.S. Department of Health and Human Services in the Obama administration. He has experience in health care startups, as well as local, state and federal government, and can be reached at brian.chiglinsky@gmail.com.
