Mergers and acquisitions are becoming more common in the healthcare industry as providers look to expand their reach and offer more services. But they can have severe consequences for patients and providers alike.

New research suggests that healthcare mergers and acquisitions create uncompetitive markets that result in higher patient prices. In addition, mergers can negatively impact patient satisfaction and quality of care.

Costs

Healthcare mergers and acquisitions have become an increasing trend in the industry. In 2017, healthcare organizations announced 115 mergers totaling over $175 billion, which is expected to continue growing in 2019.

Most healthcare mergers involve consolidating smaller hospitals or systems to drive down costs. However, many of these mergers still need to achieve their cost savings targets.

Several studies have shown that hospital consolidation diminishes competition in the market and leads to higher patient prices. The impact of this is especially true for needs where there is a high level of market concentration.

Mergers of larger hospitals and systems can offer financial stability, efficiency gains, improved service quality, and access to a network of system resources, equipment, and facilities. But merging systems requires a framework that supports sophisticated process management, data sharing, and governance.

Quality

The quality of care provided to patients is a critical factor in their health and well-being. Everyone, including patients and providers, should receive care that meets or exceeds the highest standards of clinical practice.

To be quality-driven, healthcare organizations need to establish a set of standards that are based on current professional knowledge and practiced norms. These standards are then used to guide the treatment of patients by their providers.

Many mergers and acquisitions in healthcare have promised that they will improve the quality of care for patients, but the evidence needs to be more conclusive on whether this is true. Moreover, some studies have found that consolidation can adversely affect the quality of care, possibly caused by diseconomies of scale and bureaucracy.

Access

Access to care is a complex issue and depends on various factors, including physical accessibility, affordability, and acceptability. It also involves multiple factors that affect health systems, such as policy, resources, and organization.

Healthcare mergers and acquisitions are a common way health systems expand their services and strengthen patient care. For example, a recent research firm report found that about 40% of affiliated hospitals have added one or more services after a merger or acquisition.

Healthcare mergers are increasing as health system CEOs, and executives look to improve their financial condition and reduce costs. However, the health industry is increasingly facing competitive pressures from a new class of competitors who can offer lower-cost outpatient services. These include large national retail chains and tech companies, which do not bear the high costs of providing acute-care services.

Safety

Even though healthcare mergers and acquisitions can lead to better patient outcomes and lower costs, they also carry significant risks for patients. As a result, it’s essential for healthcare executives to carefully consider the impact on patients and design deals that won’t harm them.

To avoid this, providers need to prepare their staff and facilities to cope with the impact of a merger. They’ll need extra care regarding staff orientation, resources, and facility culture.

Healthcare executives should also conduct due diligence on safety issues in their target’s workplace. They should look into whether the target is current on changes to the Families First Coronavirus Response Act (FFCRA), which mandates that employers provide paid sick leave and expand family leave to eligible employees.

Morale

Healthcare mergers and acquisitions have a significant impact on patients and providers. Despite some positives, these deals often result in higher costs and deteriorating care quality for both.

In 2017, healthcare organizations announced 115 merger and acquisition transactions worth $175 billion. This number is expected to grow even further in 2019.

Healthcare mergers and acquisitions significantly impact morale, which is a group’s spirit or mental health. High morale is a crucial element of organizational success. Employees with high morale are productive and have better work-life balance.