Amid growing unease, providers, insurers and others are forming unconventional healthcare mergers, while big hospitals are uniting with their own.
There has been a spate of mergers in the healthcare sector as changes to tax and healthcare legislation, as well as rising competitive threats from tech firms like Amazon, fuel uncertainty. Some have different types of businesses joining forces. UnitedHealth Group, for example, plans to buy DaVita Medical Group. The insurer already has some 30,000 doctors, a chain of surgery centres, and plans to build an ambulatory care business, all moving it closer to direct delivery of care.
Another such merger is that of Aetna and CVS Health. By tying up an insurer and a retail chain, the companies plan to turn CVS’ approximately 10,000 drugstores into “community-based healthcare hubs.”
While these mergers blur traditional lines, others aim at consolidation. Big non-profit hospital groups are pursuing mergers in order to gain more scale – and some say, more leverage with insurance companies. California-based Dignity Health and Catholic Health Initiatives of Kentucky plan to become a hospital chain spanning 28 states. Ascension, already the nation’s largest non-profit health system, is in talks to merge with Providence St. Joseph Health. This would create the largest hospital owner in the US, the Wall Street Journal reports.
As the New York Times explains, “Hospital executives are realizing that someone else, including an insurance company employing the nurse at a walk-in clinic or the doctor at a surgery center, wants to take over their relationship with patients – and the potential revenue that those patients represent.” Mergers enable hospital systems to become much larger “and have much stronger tentacles into the patient population they are trying to reach,” said W. Kenneth Marlow, a healthcare lawyer with Waller Lansden Dortch and Davis.
Apart from legislative and competitive factors, hospitals are also being compelled to reconfigure themselves by the greater choices now available to those seeking care. Patients want alternatives that are less expensive and more convenient, and are increasingly opting for walk-in clinics, urgent care centres or smartphone apps. The war for patients is on, and changes to healthcare delivery – through greater efficiencies, new technology and other innovative means – may no longer be optional.
