Expert Commentary

Covering hospital mergers and acquisitions of physician practices: 3 tips from experienced health care journalists

The number of independent hospitals has declined in recent years as a result of mergers, while the number of hospitals that are part of larger systems has risen. It's important for local reporters to look into what that means for their communities.

hospital mergers
Photo by Adhy Savala on Unsplash

In seeking to win his current job, U.S. Health and Human Services Secretary Xavier Becerra assured senators that he’d stick with his quest to prevent consolidation in the field of health care from raising costs for consumers and businesses.

“I believe that all Americans should be able to access affordable health care, and part of that is identifying solutions to hospital over-consolidation,” Becerra told the Senate Finance Committee in February. “I hope I have the opportunity to work with you to tackle this issue and pursue solutions that strengthen our federal programs and protect patients and consumers.”

In choosing Becerra, President Joe Biden tapped one of the nation’s leading figures in the battle against higher costs of medical care due to consolidation. As attorney general of California, Becerra scored a notable 2019 win against one of the state’s largest hospital systems, Sutter Health, which included pledges by the medical organization to halt practices that limited insurers’ bargaining clout.  Both state and federal officials are under pressure to address the consequences of consolidation in health care. The Federal Trade Commission in January 2021 announced plans for sprawling investigation into how hospitals mergers and acquisitions of physician practice merger affect competition.

The number of independent hospitals has declined in recent years as a result of mergers, while the number of hospitals that are part of larger systems has risen, according to a report from the nonprofit Kaiser Family Foundation. By 2017, two thirds (66%) of all hospitals were part of a larger system, as compared with 53% in 2005, the report says. Other published reports, including a key one from the Medicare Payment Advisory Commission, have found hospital consolidation raises costs of health services. There are mixed reports on what happens to the quality of care, as explored in an accompanying research roundup.

For journalists, there’s pressure to cover a complex topic amid conflicting information from competing organizations. Below are tips about how to cover hospital consolidation and the integration of physician practices offered by Reed Abelson, a longtime repoter at the New York Times who covers the business of health care,  Dan Gorenstein, executive producer and host of the health care policy podcast Tradeoffs and a former health care reporter for Marketplace; and Samantha Liss, a senior health care reporter at Industry Dive, who earlier reported on health care for the St. Louis Post-Dispatch.

1. Follow the small acquisitions.

There are two major trends in in health care consolidation. There are combinations of large organizations that provide similar services, so-called horizontal mergers, which tend to draw scrutiny from journalists and antitrust agencies alike, amid concerns about such mergers driving up the cost of medical care. But hospitals also are steadily acquiring smaller physician practices — so-called vertical consolidation.

Some of these acquisitions don’t meet the minimum size-of-transaction bar to warrant antitrust investigations, explain economists Cory Capps, David Dranove, and Christopher Ody in a 2017 Health Affairs article. But published studies and papers have found hospital consolidation in both forms can raise the cost of care, a topic covered in greater detail in our related research roundup.  

Vertical health care consolidation also needs scrutiny, writes Erin C. Fuse Brown, director of the Center for Law, Health and Society at Georgia State University College of Law, in an August 2020 article for the nonprofit National Academy for State Health Policy.

“Policymakers are now starting to realize the threat posed by vertical health care consolidation, years into a wave of vertical mergers that is accelerating with the strain on independent practices from the COVID-19 pandemic,” Brown writes in her article, titled “State Policies to Address Vertical Consolidation in Health Care.”

Liss says it’s important for local news reporters to try to keep tab on those smaller transactions happening in their communities. Journalists may notice a pattern such as consolidation of the orthopedic specialists or obstetricians working in their region, only if they pay attention, she says. Otherwise, this consolidation can go undetected while a hospital builds up significant market dominance, Liss says.

“Maybe it’s that last deal where folks realize, ‘Oh … this one entity controls X amount of the surgery centers in this state’ or there are no more independent cardiologists or independent OB GYNs,” she says.

2. Ask employers and state attorneys general for their views on consolidation, and get to know the community.

Many employers, especially larger ones, are opting to pay for some or all of the health services for their workers directly from corporate funds rather than by purchasing health insurance for them, according to an October 2020 report from the nonprofit Kaiser Family Foundation.

That gives these companies an even higher stake in monitoring what’s happening with prices charged by hospitals and physician offices.

“They can be helpful in explaining some of the dynamics and how it affects their employees,” Abelson says.

She also recommends talking to state attorneys general who may monitor hospitals’ mergers and acquisitions. These can include insurance departments and attorneys general.

Liss urges journalists to make time to visit the communities likely to be affected by a merger.

Journalists can try to talk to people in local businesses like coffee shops and also reach out to physicians working in what are called independent practices, meaning they are not affiliated with hospitals. Liss also suggests contacting groups such as the Chamber of Commerce. In many cases, hospitals will be major employers in a community, sometimes even the largest one. By trying to immerse themselves in a community, journalists can learn what the people living there hope a hospital merger or large acquisition will do, she says.

3. Review the published research on hospital consolidation. Seek out experts to help you explain the conclusions of published papers in simpler terms.

Abelson, Liss and Gorenstein all recommend becoming acquainted with the studies published on the effects of hospital consolidation. The Journalist’s Resource covers some of this work in an accompanying research roundup.

“The academic research can be an important underpinning for these kinds of stories,” says Abelson.

Preparing this way can help journalists ask questions about the assertions hospitals may make about how consolidation can benefit patients, all three journalists say. Hospitals, which often play a large role in community life, may not welcome these questions about their acquisitions, Liss says.

“It can be intimidating when you have maybe the area’s largest employer breathing down your neck,” she says.

Gorenstein notes that journalists may only have a few chances to explain for their audiences what’s at stake with hospital consolidation. Local reporters in resource-constrained newsrooms may not have the opportunity to report more than one or two stories on the issue.

“You’re only going to have so many opportunities to capture the essence of the story,” he says. “So you want to make sure when you come out of the gate, you’re getting it right and you’re really grounded in the evidence and the data.”

Much of the research in this field is a little wonky, and may take a little extra time to translate for your audience. But many researchers are willing to walk journalists through their work.

“The academic community stands ready to help,” Gorenstein says.

Source list

Below is a list of organizations and researchers who have told The Journalist’s Resource they are willing to help reporters.

  • Dr. Adrian Diaz, a national clinician scholar at the University of Michigan Institute for Healthcare Policy and Innovation. Diaz has published research looking at how consolidation affects surgery.
  • Dr. Susan Haas, an obstetrician-gynecologist and co-principal investigator of Ariadne Labs. Haas’ work includes efforts to understand and avoid the risks to patients when consolidation of hospitals forces physicians to quickly adapt to new practice settings.
  • Thomas (Tim) Greaney, a visiting professor at UC Hastings Law. A former assistant chief in the DOJ’s  antitrust division, Greaney specializes in the effects of consolidation on health care and the tools the federal government has to monitor these transactions.
  • Health Care Costs Institute (HCCI). Supported by health insurance, foundations and the research community, the nonprofit HCCI has a broad collection of statistics available on U.S. medical spending.
  • Dr. J. Michael McWilliams , a professor of health care policy and medicine at Harvard Medical School. McWilliams has published research papers on the effects of consolidation on health care.
  • Mark Miller, executive vice president of health care at Arnold Ventures. A former executive director of the Medicare Payment Advisory Commission, Miller’s expertise includes the debate about how federal reimbursement policies have worked to encourage consolidation.