How Hospital Mergers and Acquisitions Benefit the Community | FTI Consulting

How Hospital Mergers and Acquisitions Benefit the Community

Corporate Finance

April 1, 2015

Much that has been written and said about hospital mergers and acquisitions is misleading. What the facts show is that over the past six years, hospitals have responded to private sector and government incentives to provide higher quality and more efficient health care by, among other strategies, partnering with others. Sometimes those partnerships involved mergers with or acquisitions of other hospital.

The overwhelming majority of those transactions are procompetitive and fully support the twins goals of higher quality and more affordable health care.

Facts: Nearly all hospital transactions have to be reported to the Federal Trade Commission and the Department of Justice's Antitrust Division (DOJ) for scrutiny. Even for those that do not have to be reported, typically because they are smaller transactions, FTC, DOJ and the state Attorneys General have the opportunity to (and often do) investigate if they believe the transaction raises competitive concerns.

Facts: Hospital markets are local. Determining the potential competitive impact of any transaction begins by looking for other hospitals in the area.

The Center for Healthcare Economics and Policy (Center) undertook a comprehensive study to determine just how many hospital transactions there have been since 2007 and how many hospitals remained in a local area following those transactions to provide options for patients in need of hospital care.

The Center measured the impact of these transactions by Metropolitan Statistical Area, which is a geographical region with a relatively high population density at its core and close economic ties throughout the area.

Facts: Between 2007-2012, only a fraction of the hospital field, 551 hospitals or about 10% of community hospitals, have even been involved in a transaction(merger or acquisition).

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