The American Hospital Association's effort to show mergers cut costs and improved outcomes drew swift criticism from academics and industry players who pointed to a body of research contradicting those very conclusions.
AHA released a report Wednesday claiming acquired hospitals enjoy a reduction in annual operating expenses of more than 2% along with a statistically significant drop in readmission and mortality rates. Backlash to the study was swift, including from researchers holding their own call to highlight what previous studies have found on the effects of hospital mergers, which oppose the hospital lobby's findings.
Martin Gaynor, an economics and health policy expert at Carnegie Mellon University, said he was skeptical of the AHA study because it was commissioned by the trade group itself.
Previous studies have shown prices tend to be higher in more consolidated markets and even mergers between hospitals in different markets, or what's known as cross-market mergers, can lead to higher prices. There is "substantial and clear evidence on this," he said.
"What do you think that report is going to say? Gaynor asked facetiously. "Suppose the report was done and they found that mergers didn't save any money at all, would they have put that report out?"
The effort by the AHA comes amid increasing concentration of health systems. Many acquirers are buying cross-market players, which has garnered little regulatory scrutiny, according to Harvard Business School professor Leemore Dafny, who researched this topic. Her study calls for regulatory authorities to think differently and update their methodology on assessing anticompetitive threats.
The current methods "assume there can be no increase in bargaining leverage unless the merging parties are vying to provide the same set of services to the same set of patients." Dafny's paper seeks to point out otherwise.
Mergers and acquisitions continue to reshape the healthcare landscape, according to Kauffman Hall, which found the size of the deals continued to get bigger in 2018. And nonprofit systems were doing the acquiring in 75% of the transactions last year. Moving forward, systems are continuing to compete against new market entrants and are beefing up major regional footprints, according to the report.
America's Health Insurance Plans criticized the study through various tweets attempting to fact check the study's claims.
Rick Pollack, CEO of AHA, said the study was authored in part by Monica Naether, whom Pollack said has a lot of credibility, is well-respected and previously worked at the Federal Trade Commission.
"We think that this is a solid report and its one that deserves consideration," Pollack said during a conference call Wednesday with reporters.
The hospital lobby commissioned consulting firm Charles River Associates to conduct the report, which in part relies on interviews with health systems that have engaged in mergers or acquisitions. The second part of the report analyzed data on cost and quality between 2009 and 2017 and claims it found a 2.3% reduction in annual operating expenses at acquired hospitals and a statistically significant reduction in readmission and mortality rates.
Health system executives said acquisitions improved clinical quality and reduced costs. The interviews were not randomized, which garnered questions about cherrypicking the best results.