Legal Articles

September 20, 2010

The Urge to Merge

Trend spotters say we’ll continue to see an uptick in health care mergers and acquisitions as hospitals, primary care providers, research labs, drug makers and insurance companies consolidate services. A Wall Street Journal article reported that nearly 30% of all U.S. mergers in 2009 came in the health care industry, up from a typical rate of about 10% annually.

Locally, Providence Health Care and two Spokane-based cardiology groups, Spokane Cardiology and Heart Clinics Northwest, announced in July of this year that they will merge in the fall of 2010.

With rising health care costs, unknown ramifications of the nation’s health care reform bill, the lingering recession and declining utilization and payments, those in the health care industry say consolidating services offers several advantages:

• More efficient patient care.
• Improved patient safety.
• Consolidated patient records.
• Ability to attract and retain more specialists.
• Provide a broader array of services.
• Access to resources of a larger organization.
• Reduce duplication of services and unnecessary testing.
• Easier access to financing for expansion projects and new equipment.
• Reduced operating costs.
• Greater leverage negotiating managed care plans and private insurers.

Opponents fear that mergers and acquisitions will create monopolies, destroy competition and ultimately offer the public worse, not better, health care. Smaller insurance companies find it harder to compete with large players because they don’t have the bargaining clout to recruit new patients without provider discounts. Without high patient numbers, they can’t negotiate for discounts.

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