America’s hospitals are vital to the well-being of many local communities and, indeed, our entire nation. Unfortunately, they are faced with the increasingly difficult task of balancing quality comprehensive care for all patients with the need to invest in advanced medical technologies and systems while maintaining cost-effective operations. When a facility is unable to juggle these complex competing interests, it is forced to close, leaving many communities with an uncertain future. Halting this worrying trend will require a change in policy.
In many communities, access to health care and the presence of health care facilities is an essential part of their overall economic vitality. Rural hospitals provide some of the highest paying jobs available in these areas and are often a major employment engine. These establishments are often the first, second or third employer in their locality, and a study found that 14% of total employment in rural communities is in the health sector.
The secondary economic effects are just as striking. A study by the American Hospital Association found that every dollar spent by a hospital supports $2.30 additional business activity. Not only that, but hospitals also attract businesses and professionals to live and invest in communities. Like a specialist put it: “If a company is looking at where to expand…they look at the school system and the healthcare system and want to have that available to attract and retain their employees.”
With the rapid expansion of remote work following the COVID-19 pandemic, access to healthcare is also an important consideration for those considering relocating to rural areas.
Unfortunately, 59 hospitals closed from 2015 to 2019. The COVID-19 pandemic has exacerbated this concerning trend, with 11 hospitals closing in 2020 only. Many healthcare facilities that were on shaky financial footing before the pandemic were simply unable to cope with the double shock of unexpected personal protective equipment and staffing costs as well as lost revenue from surgeries. elective and outpatient treatments, and have finally reached their indicating breaking point.
Such closures have drained many communities and local governments of their economic engine. According to Carolyn Bruce of the Western Health Alliance after a hospital closes, “the rest of the community — health-wise and economically — can go into a downward spiral of decline.”
Beyond the direct job losses caused by hospital closures, for example, a depressed tax base within the community can put other public sector services such as teachers, police and firefighters at risk. , amplifying the negative effect of these closures.
To avoid further loss of healthcare facilities, many hospitals and healthcare systems are turning to consolidation. Unfortunately, the Federal Trade Commission is actively interfering in this major industry reorganization. The FTC’s opposition is based on its outdated model of “health care contestwhich argues that the consolidation of hospitals and healthcare providers will promote monopolization, reducing competition and increasing costs. Such outmoded notions have no application in today’s health care environment.
More recent analyzes show that most mergers do not impede market competition or negatively affect patient outcomes. Recent legal scholarship argues that for hospitals and healthcare providers, there is “a lack of an empirically grounded and reliable analytical framework related to competition and market power and questions about whether antitrust law is a remedy for the alleged damages. In other words, there is no relevant data to establish that competition between hospitals is negatively affected by this wave of consolidation.
Research by experts from Maryland Agency for Healthcare Research and Quality and IBM Watson Health in 2021, meanwhile, showed that mortality rates in consolidated rural hospitals fell from 9.4% to 5%, demonstrating the importance of hospital mergers in reducing “urban-rural disparities in quality of care”.
Besides, a 2021 study by Charles River Associates found that consolidations reduced hospital operating costs after the merger and led to significant improvements in key indicators of the quality of patient care, including readmission and mortality rates.
In today’s challenging public health environment, hospital consolidations are vital for healthcare providers to provide their patients with the best possible care in the most accessible way. Streamlining processes and costs to expand services and invest in new technologies benefits the American patient. The real risk is not to allow such consolidations but to hinder them, to the detriment of local communities and governments who rely on these facilities as a literal economic lifeline.
Policy makers and regulators must not stand in the way and must enable solutions instead of hindering progress.