It’s easy to see the appeal of cross-market hospital mergers to the marrying partners. For starters, the arrangements draw less antitrust scrutiny than same-market mergers while opening consolidation opportunities outside of already cramped local markets.
How these long-distance entwinements help patients is a separate question. Will the alliances embolden combined entities to raise prices? Will service lines get eliminated, thus reducing patient access, at sites run by financially weaker corporate partners?
KFF asks the questions and analyzes the trends driving them in a report posted Aug. 23.
Defining a “cross-market merger” as one that brings together provider orgs serving geographically distinct catchment areas, the report’s authors note that such deals tend to take one of two forms.
In one, two health systems operating in different geographic markets come together in a marriage of relative equals.
In another, a larger or stronger health system buys a smaller system outside the large system’s existing market.
Cross-market mergers “can involve hospitals and health systems that are in neighboring markets as well as entities that are hundreds or even thousands of miles apart,” the KFF authors point out.
They cite a recent study showing around 1,500 hospitals were targeted as part of a completed merger or acquisition from 2010 through 2019—and a majority of these deals, 55%, involved hospitals or health systems in unconnected commuting zones.
A separate study found that, between 2010 and 2018, one in eight rural hospitals formally joined forces with hospitals and/or health systems in other markets.
The authors list some cross-market mergers that have caught their eye in recent years due to the dollars in play: more than $5 billion in merging pairs’ combined operating revenues.
The top five in this group:
- $102.3 billion—Kaiser Permanente (Oakland, Calif.) and Geisinger (Danville, Pa.). Merger announced in April 2023, still under review.
- $23.1 billion—Advocate Aurora Health (Milwaukee and Downers Grove, Ill.) and Atrium Health (Charleston, N.C.). Merger completed in December 2022.
- $12.9 billion—Spectrum Health (Southfield, Mich.) and Beaumont Health (Grand Rapids, Mich.). Merger completed in January 2022.
- $10.6 billion—Intermountain Healthcare (Salt Lake City) and SCL Health (Broomfield, Colo.). Merger completed in April 2022.
- $9.8 billion—Presbyterian Healthcare Services (Albuquerque, N.M.) and UnityPoint Health (West Des Moines, Iowa). Merger announced in March 2023, still under review.
In their discussion the authors comment that antitrust agencies “have begun to take a closer look at mergers of hospitals and health systems across different geographic regions, which may have a bearing on affordability and access to care in many regions across the country, but they have yet to fully litigate a cross-market merger.”
More:
“Some policy and regulatory options have been floated that could address some of the concerns about cross-market mergers. For example, government regulators could use their existing authority to scrutinize cross-market mergers, which antitrust agencies have begun to do. States could enact laws to give government agencies authority to require some or all types of providers to obtain prior approval from the government before merging.”
Dave P. has worked in journalism, marketing and public relations for more than 30 years, frequently concentrating on hospitals, healthcare technology and Catholic communications. He has also specialized in fundraising communications, ghostwriting for CEOs of local, national and global charities, nonprofits and foundations.