You get big? I’ll get bigger.
In the face of increasing consolidation among insurers, hospitals are themselves linking up at ever-greater rates. The Wall Street Journal reported Monday that we may see one of the biggest hospital deals yet: a possible merger of non-profit giants Ascension and Providence St. Joseph Health, which would create the largest hospital group in the United States
But while consolidation seems like a rational response to the issues facing hospitals, it isn’t a surefire solution.
The results of the strategy have been mixed. For-profit hospital groups have loaded up on debt and acquisitions, only to see share prices plunge due to disappointing results. And even HCA Healthcare Inc. — the largest hospital chain, which has avoided large acquisitions recently — has seen its share price stagnate in a tough environment.
Hospitals are expensive for patients, and insurers have been pushing people to lower-cost alternatives. They’re doing this with plan design and high deductibles — and increasingly they’re becoming providers themselves. Cost savings would be a priority if this merger happens, but no tie-up is going to make hospitals anything but the priciest place to get treated or change the overall shift toward patients finding care elsewhere.
Hospital groups are also moving into outpatient treatment, but knitting together a new giant that controls nearly 200 hospitals may distract from that effort.