What does acquisition mean in healthcare?
In many cases, hospital acquisitions or mergers occur when a small, independent hospital or clinic would not longer be able to operate on its own. A larger organization purchases the smaller provider, thus enabling it to continue operation.
Why do hospitals acquire other hospitals?
Many of the purported benefits of hospital mergers—including coordination of patient care, sharing information through electronic medical records, population health management, risk-based contracting, standardizing care, and joint purchasing—can often be achieved through alternative means that do not impair competition …
What is a merger and acquisition in healthcare?
May 6, 2022 – Healthcare mergers and acquisitions further industry consolidation by combining two or more healthcare companies, hospitals, or physician practices. Typically, merging entities aim to lower healthcare costs and improve quality of care through these transactions.
How mergers and acquisitions may impact the healthcare system?
Impact on Healthcare Costs In 2021, AHA updated its analysis of hospital transactions and found that mergers and acquisitions were associated with a 3.3 percent reduction in operating expenses between 2009 and 2019. Based on this figure, acquired hospitals could save $9.5 million each year.
Why are mergers and acquisitions important in healthcare?
“Some hospitals have found that partnerships, mergers and acquisitions were a necessary response to a changing environment in their community and have allowed them to maintain the vital services they provide each and every day to patients and communities,” Pollack continued in the statement.
Why are hospitals acquiring physician practices?
When hospitals gain more market power by snapping up doctor practices, they can control referrals and demand higher prices, which in turn makes premiums and costs for everyone even higher. Studies clearly link provider consolidation and higher health care costs.
What are the main two reasons for hospitals to merge?
Five Advantages of Hospital Systems Mergers
- Access to Capital and Resources.
- Reduced Costs.
- Standardization of Clinical Protocols.
- Better Access to Care.
- Improved Efficiency.
Are hospital mergers good for patients?
Contrary to what health care executives advertise, hospital mergers and acquisitions aren’t good for patients. They rarely improve access to health care or its quality, and they don’t reduce prices. But the system in place to stop them is often more bark than bite.
Do hospital mergers improve quality of care?
The study’s results indicate that hospital mergers can achieve improvements in quality, the researchers wrote. “This study of a system merger with a safety net hospital found that a full-integration approach to hospital consolidation was associated with improvement in quality outcomes.
Why are hospitals consolidating?
Everyday Americans bear the brunt of hospital consolidation. Hospitals in highly concentrated markets can charge higher prices for medical services and have greater leverage to negotiate higher prices from health insurance providers, leading to ever-increasing health care costs for individuals and families.
What does practice acquisition mean?
Organizations often use practice acquisitions as a conduit to align with new physician leaders. Typically, a health system’s offer to purchase a practice is accompanied by an offer to the practice leader to take on a leadership position in the post-acquisition employment arrangement.
How mergers or acquisitions can improve quality of care?
Mergers may enable rural hospitals to improve quality of care through access to needed financial, clinical, and technological resources, which is important to enhancing rural health and reducing urban-rural disparities in quality.