case study of a failed merger of hospital systems

• Corpus ID: 18411769

Case study of a failed merger of hospital systems.

• Published in Managed care 1 November 2003
• Business, Medicine
• Managed care

16 Citations

The development and maturation of a statewide academic health care system: clarian health partners/indiana university health, mergers by a private hospital: one script two different endings, hospital mergers: a panacea, the impact of specialization of hospitals on patient access to care; a queuing analysis with an application to a neurological hospital, diagnosing and resolving conflict created by strategic plans: where outreach strategies and execution meet at an academic health center, mergers involving academic medical institutions: impact on academic radiology departments., surgical leadership competencies for navigating hospital network expansion., across the pond–lessons from the us on integrated healthcare, san antonio military medical center integration: a case study in organizational leadership design, san antonio military medical center integration: a case study in organizational leadership design., 6 references, mergers involving academic health centers: a formidable challenge., horizontal mergers in the united states health field: some practical realities, merging, de-merging, and emerging at deaconess billings clinic., still alone after all these years. despite integration fever, many independent hospitals remain, and some are even profitable., size does matter., when size does matter, related papers.

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Case Study of a Failed Merger of Hospital Systems

The Case Study of a Failed Merger of Hospital Systems discusses the primary factors in the failure of the merger between Geisinger Health System and Penn State University Hershey Medical Center. Merging in 1997 to create Penn State Geisinger Health System (PSGHS), the two organizations split apart in 1999. Understanding what went wrong in the Geisinger/Hershey merger provides a valuable resource in designing strategies for successful healthcare mergers and preventing unsuccessful ones.

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Impact of hospital mergers: a systematic review focusing on healthcare quality measures

Marco mariani.

1 Sezione di Igiene, Dipartimento Universitario Scienze della Vita e Sanità Pubblica, Università Cattolica del Sacro Cuore, Roma, Italia

Leuconoe Grazia Sisti

2 Istituto Nazionale per la promozione della salute delle popolazioni migranti ed il contrasto delle malattie della Povertà (INMP), Roma, Italia

3 Center for Global Health Research and Studies, Università Cattolica del Sacro Cuore, Roma, Italia

Claudia Isonne

4 Sapienza Università di Roma, Roma, Italia

Angelo Nardi

Rosario mete, walter ricciardi.

5 Fondazione Policlinico Universitario A. Gemelli IRCCS, Roma, Italia

Paolo Villari

Corrado de vito, gianfranco damiani, associated data.

Despite mergers have increasingly affected hospitals in the recent decades, literature on the impact of hospitals mergers on healthcare quality measures (HQM) is still lacking. Our research aimed to systematically review evidence regarding the impact of hospital mergers on HQM focusing especially on process indicators and clinical outcomes.

The search was carried out until January 2020 using the Population, Intervention, Comparison and Outcome model, querying electronic databases (MEDLINE, Scopus, Web Of Science) and refining the search with hand search. Studies that assessed HQM of hospitals that have undergone a merger were included. HQMs were analyzed through a narrative synthesis and a strength of the evidence analysis based on the quality of the studies and the consistency of the findings.

The 16 articles, included in the narrative synthesis, reported inconsistent findings and few statistically significant results. All indicators analyzed showed an insufficient strength of evidence to achieve conclusive results. However, a tendency in the decrease of the number of beds, hospital staff and inpatient admissions and an increase in both mortality and readmission rate for acute myocardial infarction and stroke emerged in our analysis.

Conclusions

In our study, there is no strong evidence of improvement or worsening of HQM in hospital mergers. Since a limited amount of studies currently exists, additional studies are needed. In the meanwhile, hospital managers involved in mergers should adopt a clear evaluation framework with indicators that help to periodically and systematically assess HQM ascertaining that mergers ensure and primarily do not reduce the quality of care.

Introduction

Over the last three decades, a growing number of healthcare organizations of different countries, especially in the USA and in Europe, underwent mergers. 1–3 Referring to hospitals, the merger is defined as a combination of previously independent hospitals, formed by either the dissolution of one hospital and its absorption by another, or the creation of a new hospital from the dissolution of all participating hospitals. 4 Hospitals mergers might have been encouraged by some national policies such as the introduction of the Medicare Prospective Payment System and the growth of the managed care in the 1980s in the USA 5 , 6 and the promotion of competition inside the health system market promoted by the Conservative Government since 1991 in the UK. 2 These merger processes have determined substantial changes in healthcare markets. 2 In the USA, in 1994, more than 10% of the hospitals resulted as involved in some form of mergers 6 reaching a peak of 2,497 mergers in 2003. 6 Similarly, in the UK, between 1997 and 2006 more than 100 mergers were started; in the early 2000s, there were 180 acute National Health Service (NHS) trusts while, by 2015, the number of acute foundation trusts and NHS trusts had dropped to 150 (17% reduction). 2 , 7 In Italy, in recent years, the merger policy led to a 30% reduction in the number of hospitals: from 142 hospitals in 2011 to 99 in 2018 8 and also in Northern Europe, countries as Norway and Denmark undertook similar processes. 9 , 10

Drivers for mergers are different and depend on countries and health system features: in Italy and in the UK, mergers were primarily driven by political decisions, while in USA, where federal or state government has less power to set the policy agenda, they were mainly entrepreneurial and market-driven. 2 , 11 In literature, political and economic issues are reported as the main merger drivers.  Aimed at achieving economies of scale and scope, rationalizing services, financially sustaining smaller hospitals, increasing the ‘bargaining power’ and enlarging organizations to address commissioner challenges. 12 , 13  

Affecting the catchment area, the hospital organization and functioning and increasing the market concentration, hospital mergers could potentially impact healthcare quality measures (HQMs) affecting patients as well as employees and communities. In line with the volume–outcome relationship, service consolidation could improve the quality of care, for example with regards to surgical procedures. Nevertheless, some studies argued that less concentrated and high competitive markets report better clinical outcomes in hospitalized patients, i.e. in terms of mortality. 14 , 15 Conversely, clinical outcomes seem to remain unchanged or rather worsened among acquired or merged hospitals. 16

Despite this, to date, literature on the impact of hospitals mergers appears to have mainly focused on economic aspects. 17 On the other hand, to the best of our knowledge, literature summarizing the impact of merger on HQM is still lacking. Consequently, we aimed at systematically review available evidence regarding the impact of hospital mergers on HQM focusing especially on processes indicators and clinical outcomes.

Literature search and study selection

A systematic research was conducted querying MEDLINE, Scopus, Web of Science from their commencement until January 2020. To gather evidence on the impact of hospital merger on HQM, a search string was elaborated using the Population, Intervention, Comparison, Outcome (PICO) model. 18 In detail, we identified the ‘population’ as hospital facilities, the intervention as the merger, the comparator as non-merged hospital or the same hospital in the pre-merger status, and the outcome as structure, process and outcome HQM. 19 Search strings were built using the following keywords: ‘hospital’, ‘merger’, ‘consolidation’, ‘outcome’, ‘process’, ‘indicators’, ‘performance’, ‘measure’ ( Supplementary data ). When available, the use of MeSH terms allowed us to retrieve more comprehensive information. The search was refined by hand search performed using Google Scholar, analysis of bibliographic citations and experts recommendation. The research was carried out using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guiding the systematic review reporting and was restricted to articles published in English. 20

Studies were considered eligible if they quantitatively assessed HQM of hospitals that have undergone a merger. In case of perception/satisfaction of employees qualitative studies were screened for inclusion as well. Exclusion criteria were represented by publications without original data (e.g. reviews, editorials) and with intervention represented by vertical merger or by non-homogeneous mergers such as those between hospital and non-hospital facilities. Regarding structure healthcare measures, financial indicators were not included because previously addressed in literature. 17 Two investigators independently screened titles and abstracts of all records and evaluated full texts of potentially eligible studies for their inclusion in the review. At all levels, disagreement and discrepancies between the investigators were solved by consensus.

Data extraction

From each study, the following data were extracted: first author's last name, year of publication, country, study design, period of observation (before and after merger), number of hospital involved in the merger, main investigated outcomes, main results in HQM classified in structure, process and outcome. 21

Quality assessment

The risk of bias (RoB) and the methodological quality of the included studies were assessed using the National Institutes od Health (NIH) Study Quality Assessment tools for before–after and case–control studies, and The Joanna Briggs Institute Systematic Reviews Checklist for qualitative researches. 22 , 23 NIH Study Quality Assessment tools include items regarding study objective and population, sample size, inclusion–exclusion criteria, blinding of outcome assessor, and appropriate statistical analysis. Furthermore, NIH tools encompass control group selection criteria and exposure factor items for case–control studies, and attrition rate and outcome measures items for before–after studies. 22 According to The Joanna Briggs Institute Systematic Reviews Checklist, 23 congruity among philosophical perspective, research methodology, objectives, methods used to collect and analyze data, interpretation of results and researcher influence on the study were described and assessed for qualitative research. Any disagreement in RoB evaluation was solved by discussion and, if necessary, a third reviewer was involved. Based on the reported scale, articles were classified into three levels of RoB: low (76–100%), moderate (26–75%) or high (0–25%).

Data synthesis

Studies included showed methodological heterogeneity, particularly regarding study design and outcomes reporting. Few studies considered similar outcomes, and when they did, they had either different control group or different methodology of outcome assessment. A pooled analysis would have limited utility, therefore, a meta-analysis was deemed inappropriate. We preferred to synthesize data through a narrative synthesis of the study findings focusing on outcomes of interest reporting statistically significant results.

To further support the narrative synthesis and easier the identification of consistent results (i.e. increasing or decreasing of the same indicator in different studies), we performed a strength of evidence analysis according to literature. 24 , 25

The strength of the evidence was performed using a rating system based on the methodological quality of the studies and the consistency of results. 24 , 25 Only outcomes reported in two or more studies were evaluated. Results were synthesized into three levels of scientific evidence 25 :

• strong evidence: provided by generally consistent findings in multiple high-quality studies;
• moderate evidence: provided by generally consistent findings, in one high-quality study and one or more moderate-quality studies or in multiple moderate-quality studies; and
• insufficient evidence: inconsistent findings in multiple studies.

Study findings were considered consistent if >75% of the studies reported the same conclusion with statistically significant results ( P < 0.05). 24 , 25 High- and moderate-quality studies were identified through the RoB assessment. In case of insufficient evidence, a sensitivity analysis rating the outcome as promising and not promising was also performed. Outcomes were considered as promising, in presence of at least two significance in outcomes and >75% of consistent findings.

Study selection

The results of abstract and full-text screening with reasons for exclusion are shown in the PRISMA diagram 20 in figure 1 . The database research resulted in 4,709 records while 4 articles were retrieved through hand search. After checking for duplicates, 3,662 articles were analyzed for eligibility and 3,636 were excluded after the screening of titles and abstracts. The remaining 26 articles were selected for full-text review resulting in 16 articles eventually included in the analysis.

PRISMA flowchart of studies selection

Characteristics of the studies included in the analysis are reported in table 1 . Years of publication of the studies ranged from 1997 of Alexander et al. 4 to 2020 of Beaulieu et al. 26 A total of 62.5% of the included articles were longitudinal retrospective before–after studies, of which 40% were controlled studies and the other 50% cross-sectional studies, only one study included both a cross-sectional (survey) and a before–after design. The majority (56.3%) were developed in the USA, followed by Northern Europe (Norway, Denmark, Sweden) accounting for 31.3% of all studies. The sample size of hospitals involved in the merger ranged from 246 hospitals 26 to the merger of only 2 hospitals into 1. 27 , 28 The period of observation, when specified, ranged from 3 months to 8 years with a mean of 2 years before the merger and of 3 years after.

Studies characteristics

CABG: coronary artery bypass grafting; CHF: chronic heart failure; ER: emergency room; FPF: fractured proximal femur; FTE: full time equivalent; FTR: failure to rescue (death among surgical patients with potentially serious but treatable in-hospital complications); IHD: ischaemic heart disease; IT: information technology; PCI: percutaneous coronary intervention; SNF: skilled nursing facilities.

For Romano et al., 28 main outcome obstetric trauma both vaginal with and without instrument are considered. For perception in staff outcome: in Holm-Peterson et al., 35 satisfaction, leadership tasks, delegation, reflections on size of hospital wards are explored; Cost-reduction benefits, improvement of clinical quality, ability to assume payment risk dimensions are analyzed in Noether et al. 32

Regarding HQM, the majority of the studies focused on process measures with 93.8% 2 , 4 , 5 , 9 , 16 , 26 , 27 , 29–36 of them reporting at least one process measure. Six studies evaluated only the perception of staff concerning the merger process 27 , 32–36 ; three (18.7%) analyzed both process and structure measures 4 , 9 , 30 ; three (18.8%) 16 , 26 , 31 process and outcome measures, eventually only one study 2 has analyzed indicators belonging to all dimensions of healthcare quality (structure, process and outcome).

In detail, regarding the structure measures, 25% of the included studies reported the number of beds and measures related to the staff (overall or stratified according to the professional role). 2 , 4 , 9 , 30 Regarding process measures, the majority of HQM investigated were: waiting time for admission, number of visits, length of stay and perception of staff. As to this latter, 57.1% of studies were represented by semi-structured interviews and 28.6% by structured interviews, 32 , 33 in only one case 29 an unspecified survey was used. The sample sizes for personnel interviews ranged from 14 34 to 3,119 29 informants. Personnel interviewed were mainly represented by different healthcare professional staff (71.4%), while two studies 32 , 33 specifically focused on chief executives.

Outcome measures were reported in five studies 2 , 16 , 26 , 28 , 31 and the mostly represented measures were related to: overall hospital mortality rate (40%), acute myocardial infarction (AMI) mortality (60%) and stroke mortality (60%).

Risk of bias

An overall judgement of the included studies is available online ( Supplementary data, table S1 ). The quality assessment showed variability in the overall RoB, from moderate to low. Low RoB was reported: in all case–control studies, in 16.7% of six qualitative researches and in 70% of before–after studies. Ethical approval and researchers’ cultural or theoretical orientation were not reported in all of qualitative researches; only one 35 qualitative study considered researcher influence on the research. Three before–after studies used interrupted time-series design. 4 , 26 , 29

The included studies showed methodological heterogeneity in terms of statistical analysis: five adopted difference-in-differences analysis to compare changes in outcomes in merging hospitals to changes in a group of hospital controls not involved in a merger 2 , 4 , 5 , 26 , 28 ; two studies 16 , 31 built regression models to account for confounding variables, and in one 30 it was possible to extract only the t -test values for the indicators analyzed before and after the hospital merger. To facilitate the synthesis of significant findings, table 2 provides the studies’ main statistical significant results of healthcare quality measures classified into structure, process and clinical outcomes indicators.

Main statistically significant results of single studies

For Romano et al., 28 EH is the acquiring hospital, HPH the acquired hospital. In Obstetric Trauma both vaginal with and without instrument are considered. For perception in staff outcome: in Holm Peterson et al., 35 satisfaction, leadership tasks, delegation, reflections on size of hospital wards are explored; cost-reduction benefits, improvement of clinical quality, ability to assume payment risk dimensions are analyzed in Noether et al. 32

AHRQ: Agency for Healthcare Research and Quality; EH: Evanston Northwestern Hospital; ER: Emergency Room; HPH: Highland Park Hospital; IT: Information Technology.

Structure indicators

Concerning structure indicators, the change in number of beds after merger showed a decreasing trend: statistically significant decreases in two studies (−0.12 on logarithmic scale; −33.98) 2 , 4 and a non-statistical significant decrease in another study (−20.7, t -value 0.35) were found. 29 Three studies evaluated change in hospital staff number: one 2 ( table 2 ) showing a significant decrease in total hospital staff (−0.12 on logarithmic scale), one 9 showing a non-significant reduction in the number of physician employees (−19, t -value 0.05), and the other 4 a non-significant negative value in the difference-in-difference analysis for total personnel per average daily (−35.68).

Process indicators

Regarding process indicators, three studies 2 , 4 , 5 showed a statistically significant decrease in inpatient admission (−0.11 in logarithmic scale; −743,47; −6289.35) ( table 2 ). Two studies evaluated changes in the number of outpatient visits, one with a non-significant increase 30 (2750, t -value 0.07) while the other 5 showed a statistically significant negative value in the difference-in-differences analysis (−28231.28). Acquired hospitals showed, in one study 26 , an improvement in the clinical process composite measure (0.22 standard deviation; P = 0.03) but probably not attributable to the merger since the improvement started before the acquisition.

Regarding personnel satisfaction, hospital executives considered mergers positively, especially for increased negotiation skills and costs reduction. Conversely, personnel expressed criticalities mainly regarding the different organization of merged hospitals, the inadequate communication of the merger process, the uncertainty of job positions and the lack of personnel involvement in the post-merger phase.

Clinical outcome indicators

HQM that were mostly assessed in the studies included those related to AMI mortality, stroke mortality and hospital readmission. Only one study assessing AMI mortality showed a significant negative effect on the outcome 28 finding a statistically significant increase of 4.46% in one of the hospitals that merged (the acquiring hospital). Among the four studies 2 , 16 , 28 , 31 assessing AMI mortality, three presented a non-significant worsening effect: one reported a coefficient of 0.003 16 ; the acquired hospital in another study showed a difference of + 2.22% 28 ; another a coefficient of 0.022 31 and, eventually, the last one 2 a non-significant positive effect on mortality (−0.004 in logarithmic scale).

Regarding stroke mortality, one study 28 found a significant negative effect after merger (showing an increase of +4.94% for the acquiring hospital) ( table 2 ); two studies 2 , 28 showed that the negative effect of the merger was non-significant (one 2 0.055 in logarithmic scale; the other 28 +2.42%); on the other hand, eventually, a non-statistically positive effect was found in one study. 31 Of the three studies that evaluated hospital readmissions, one 31 showed a negative effect of merger, with a statistically significant increase of the 90-day readmission for heart attack, while the other two showed a non-statistical significant positive value of: 28-day stroke readmission rate 2 and 30-day readmission rate (−0.10 percentage points; 95% confidence interval −0.53 - +0.34; P .72). 26

Strength of evidence

The strength of the evidence rating system resulted as “insufficient” for all considered indicators. The sensitivity analysis did not show promising results with the exception of the decrease in the number of beds and in the inpatient admissions ( table 3 ).

Results of the strength of evidence

NS, non-significant; +: statistical significant increase of outcome in merged hospitals; −: statistical significant decrease of outcome in merged hospitals; EH: Evanston Northwestern Hospital; FTE: full time equivalent; HPH: Highland Park Hospital; AHRQ: Agency for Healthcare Research and Quality Indicator.

In literature, the main potential benefits of mergers declared by hospital leaders usually refer to economic and financial availability, but also clinical quality improvements due to increased investments, higher volumes of specialized procedures and standardization of clinical protocols. 32

Studies analyzed in our research show that, apart from some structural and process indicators, hospital mergers resulted in non-significant improvement in the HQM compared to the period before the merger itself.

Regarding structural and process indicators, the reduction in the number of beds and in inpatients admissions ( table 3 ) could be related to a structural and functional remodelling of the merged hospitals that seek to pursue economies of scale setting the number of beds at 200–300 and keeping the annual discharges at less than 10,000. 1 , 17 Nonetheless, the tendency towards an operational reduction could depend on the pre-merger phase, especially for hospitals that merge due to financial constraints. The trend towards a reduction of the number of staff could be seen in the light of gaining efficiency by increasing hospital productivity.

Respect to the volume–clinical outcome relation, it is reported to widely vary across conditions and outcomes, with the largest benefits occurring among a small number of technically difficult surgical interventions. 17 Studies included in our research did not reach sufficient strength of evidence towards a clear improvement or worsening; only one study 28 showed a statistically significant worsening in relation to stroke and AMI mortality. Nonetheless, a tendency towards a worsening includes also other clinical outcomes such as stroke mortality and readmissions.

Lack of evidence of improved clinical quality after a merger is in line with a new research 26 that highlights that mergers do not produce significant differential change in 30-day readmission rates or in 30-day mortality and does find inconclusive improvement in clinical process measures. In addition, this study underlines that hospital mergers are associated with modest but significant deterioration in patients’ experiences. Similar findings are reported by the American Hospital Association in a study 32 that stressed that, apart from the substantial quality benefits noted by hospital leaders, small positive improvements are reported, above all in readmission rates.

Overall, the effects of the mergers could depend on some features—as the type of the organizations involved—and the merger between similar organizations, sharing the same culture and organizational attitude, appears to be more effective. 17 The early involvement and engagement of hospital staff in the pre-merger phase followed by their proper involvement over time 26 could also help to ensure the success of the merger, allowing both the structural and the functional integration of the hospitals. This involvement could limit the disadvantages of the organizational change that could undermine clinical outcomes, especially in the short time. 31

This systematic review represents a first attempt to summarize evidence regarding the impact of hospital mergers on HQM with the purpose of providing a broader picture regarding research and practice on hospital merging processes.

The strengths of this review include an a priori methodology with an accurate search strategy involving different electronic databases supplemented by hand searching, forward citation searching, study identification, appraisal, data extraction and description. Furthermore, we sought to increase the value and the validity and reliability of findings performing strength of evidence analysis. Nonetheless, several limitations could be identified. First, our research has included only publicly available English-written articles; therefore, a language bias cannot be excluded. We cannot rule out that the wide variability in the terms used to define merger, as well as the national and governmental dimension of the topic, might have limited the inclusiveness of our research.

Most of the included studies provided only descriptive statistics and some outcomes (benefits or drawbacks) achieved after merging hospitals had been evaluated only in single studies consequently providing little inferential and generalizable information.

High heterogeneity in the studies’ methodology was found, e.g. in measures used to evaluate results and in the follow-up duration (from months to years), hindering undertaking a formal meta-analysis and performing a rigorous strength of evidence analysis.

Studies included in our analysis do not show strong evidence that hospital mergers impact HQM by bringing net improvements. At the moment, few studies indicate that the benefits related to mergers could be met counteracting the potential unintended consequences as decreased competition, higher prices for patients and reduced geographic coverage of services that mergers could cause.

Since a limited amount of studies currently exists, there is a need for additional studies providing concrete evidence that hospital mergers ensure and primarily do not reduce high-quality care that patients require. Researchers should work to produce high-quality, well-designed studies with adequate follow-up, in order to evaluate all healthcare quality dimensions (including cost-efficacy and equity) of hospital mergers. In particular, quasi-experimental studies with interrupted time series design can evaluate intervention effect estimating causal effects using observational approaches when, as in this case, randomized controlled trials (the ideal approach to evaluate effects of interventions) cannot be performed. 37–39 This robust design can be employed to understand the effects of policies and the improvement in the health system quality also thanks to the ability of controlling for the secular trends present in many health system outcomes 38 , 39 (available in the Supplementary data ). Policy and decision makers and hospital managers should take into account that a merger should not start without a clear vision and continuous appraisal of benefits, drawbacks and the expected impact of the merger on patients and staff, in an evidence-based policymaking framework that helps to perform an overall periodic assessment of processes and outcomes and to adopt the appropriate corrective measures, whenever necessary.

Supplementary data

Supplementary data are available at EURPUB online.

Conflicts of interest : None declared.

• In the last decades, an increasing number of hospitals have undergone a merger but literature on the impact of merger on hospitals Health Quality Measures (HQM) is still lacking.
• Studies included in our systematic review resulted to be heterogeneous in HQM analyzed and methodology adopted mainly providing only descriptive statistics and showing moderate to low risk of bias, few statistically significant results and inconsistent findings across them.
• Additional high-quality and well-designed studies with adequate follow-up are needed ascertaining mergers do not reduce the quality of care.
• Policymakers and hospital managers who are going to start a merger process must early adopt an evaluation framework that helps to perform an overall periodic assessment of HQM during the whole process.

Supplementary Material

Ckac002_supplementary_data.

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Understanding Mergers Between Hospitals and Health Systems in Different Markets

Jamie Godwin , Zachary Levinson , and Scott Hulver Published: Aug 23, 2023

A growing body of evidence shows that consolidation in health care provider markets has led to increases in prices without clear evidence of increases in quality. Policymakers and regulators have historically focused on consolidation within the same geographic area, but there have been a large number of mergers and acquisitions (referred to as “mergers” in this brief) between hospitals and health systems that operate in different regions (referred to as “cross-market mergers” in this brief), including several multi-billion dollar deals over just the past couple of years. Some experts have raised concerns that cross-market mergers could result in hospitals and health systems raising their prices. It is also possible that cross-market mergers could result in the elimination of service lines by some acquired hospitals, which may reduce access to care.

This issue brief explains the role and implications of cross-market mergers in hospital and health system markets and describes the approaches that government antitrust agencies have taken in reviewing these types of transactions.

What Is a Cross-Market Merger?

A “cross-market merger” entails a merger between two health care providers that operate in different geographic markets for patient care. 1 , 2 For instance, this term could apply to the following scenarios:

• Two health systems that operate in different geographic markets merge. For example, in April 2023, Kaiser Permanente and Geisinger announced their plans to merge. These systems operate in different regions of the United States, with Kaiser Permanente operating in five states in the West (including California) and Georgia, Maryland, Virginia, and DC and Geisinger operating in Pennsylvania. In 2022, Kaiser Permanente and Geisinger earned $95 billion and $7 billion in operating revenues, respectively. 3
• A health system acquires an independent hospital in a geographic market where it does not operate. One example is Christus Health’s acquisition of Gerald Champion Regional Medical Center in July 2023. Christus Health is a large health system based in Texas that includes 28 hospitals, while Gerald Champion Regional Medical Center is an independent hospital in Alamogordo, New Mexico that is over 200 miles away from the nearest Christus Health facility.

Cross-market mergers can involve hospitals and health systems that are in neighboring markets as well as entities that are hundreds or even thousands of miles apart. An example of the former is the recent merger between University of Michigan Health—which is based in Ann Arbor, Michigan—and Sparrow Health System, which is based about 65 miles away in Lansing, Michigan. An example of the latter is the recently proposed merger of UnityPoint Health—which operates in the Midwest (Iowa, Illinois, and Wisconsin)—and Presbyterian Healthcare Services, which operates in New Mexico.

How Common Are Cross-Market Mergers?

Hospital and health system mergers are common, and many of these mergers involve providers in different geographic markets. For example, according to one study , about 1,500 hospitals were targeted as part of a completed merger or acquisition from 2010 through 2019 and most of these deals (55%) involved hospitals or health systems in different commuting zones. According to another study , about one in eight rural hospitals merged with an out-of-market hospital or health system from 2010 through 2018. A series of large, cross-market mergers in recent years have drawn further attention to this topic. Table 1 below provides examples of nine large, cross-market merger deals announced since June 2021, each of which entailed health systems with combined annual operating revenues of at least five billion dollars.

Cross-market mergers may be appealing to health systems that are seeking to expand for at least a couple of reasons . First, cross-market mergers have received little resistance from government antitrust agencies relative to mergers between health care providers that operate in the same market. 4 Second, many health care markets are already highly concentrated , leaving fewer opportunities for health systems to expand within a given region.

What Are the Potential Implications of Cross-Market Mergers?

Cross-market mergers may benefit patients in some instances when hospitals and health systems are able to operate more efficiently as a combined entity. Even if hospitals and health systems are located in different markets, they may be able to share knowledge and best practices with each other, such as by collaborating to develop better clinical practice guidelines and sharing effective strategies and tools for managing patients’ care. Operating at a larger scale may also facilitate providers’ participation in complicated, value-based payment programs, which some health plans offer in an effort to reduce costs and improve the quality of care. Hospitals and health systems merging within and across markets can also potentially achieve efficiencies by purchasing goods and supplies in greater volume.

In some scenarios, small and struggling hospitals may seek to merge with large health systems in order to improve their finances or offer higher-quality services . For example, a large health system with deep pockets could provide a smaller hospital with resources to purchase new equipment and invest in quality improvements or provide a financial backstop and access to capital that may enable a struggling rural hospital to keep its doors open. A large, financially successful system could also share management strategies with hospitals that are losing money to help them operate more efficiently.

However, cross-market mergers may lead to higher prices. In fact, researchers have estimated that these types of deals have led to price increases ranging from 6 to 17 percent, though only a small number of studies have focused on cross-market mergers.

There are at least a few reasons why cross-market mergers could lead to price increases, even though they entail hospitals and health systems that are not competing against each other in the same area. First, a combined health system with providers in, say, different areas of a state may be able to use its dominant position in one market to negotiate higher prices in another when contracting with a given health plan (e.g., a state employee plan with enrollees that reside in several markets). Second, a combined health system may compete with other health systems that also operate across the same markets. In that case, the combined health system may be hesitant to offer lower prices in one market out of concern that their competitor will retaliate by lowering prices and undercutting them in other markets. Finally, a large system that, say, acquires a small hospital may have more expertise in bargaining with insurers, which it could use to negotiate for higher prices.

Another concern that has been raised about certain types of mergers, which could also apply to some cross-market mergers, is that they may reduce access to care. For instance, a large health system that acquires a small rural hospital may be less responsive to community needs and more willing to eliminate service lines , such as obstetric care. Relatedly, a hospital may also reduce spending on community benefits after being acquired by a health system.

How Do Government Antitrust Agencies Approach Cross-Market Mergers?

Federal and state antitrust agencies seek to promote competitive markets —often to benefit consumers—by scrutinizing mergers and other potentially anticompetitive practices. Antitrust agencies have historically focused on mergers between hospitals and health systems that operate in the same geographic market, though there are signs that they have begun to take a closer look at cross-market mergers. While federal antitrust agencies have yet to formally challenge a cross-market merger, the Federal Trade Commission (FTC) has identified these types of deals as an area of interest and has investigated at least two specific cross-market mergers (between Advocate Aurora Health and Atrium Health and between Spectrum Health and Beaumont Health). 5

At the state level, the state attorney general in California has used its legal authority to impose conditions on mergers that have been identified as cross-market deals. These conditions have included, for example, placing restrictions on price increases and requiring that the merged entities maintain certain services, such as by having a minimum number of emergency room, intensive care, and obstetrics beds. In Minnesota, the state attorney general had begun to investigate whether to challenge a proposed merger between Fairview Health Services (based in Minnesota) and Sanford Health (based in South Dakota) before the two systems abandoned their plans in July 2023.

Cross-market mergers have never been fully-litigated by a federal or state antitrust agency, and doing so in the short term may be difficult. First, only a handful of analyses have focused on cross-market mergers, limiting the ability of regulators to cite potential consequences based on empirical evidence. Second, antitrust agencies have not yet released detailed guidelines for evaluating cross-market mergers, 6 nor have they tested legal strategies for challenging cross-market mergers in the courts. In contrast, when antitrust agencies challenge within-market mergers, they can rely on years of legal precedent as well as economic frameworks recognized by the courts. Finally, antitrust litigation can be complex and expensive. Without adequate funding, it may be impractical to challenge a large number of health care provider business practices that raise anticompetitive concerns, including cross-market mergers. Given these challenges, it is conceivable that cross-market mergers will continue unabated in the near future.

Hospital and health system mergers are common, and these mergers often involve providers in different geographic markets. Cross-market mergers may have benefits in some scenarios, for example, if the providers involved share effective clinical strategies for improving patient care. However, a handful of studies indicate that cross-market mergers can lead to increases in health care prices . It is also possible that some hospitals may become less responsive to community needs after a cross-market merger. Antitrust agencies have begun to take a closer look at mergers of hospitals and health systems across different geographic regions, which may have a bearing on affordability and access to care in many regions across the country, but they have yet to fully-litigate a cross-market merger.

Some policy and regulatory options have been floated that could address some of the concerns about cross-market mergers. For example, government regulators could use their existing authority to scrutinize cross-market mergers, which antitrust agencies have begun to do. States could enact laws to give government agencies authority to require some or all types of providers to obtain prior approval from the government before merging. California has done so, and attorneys general in the state have used this authority to impose conditions on cross-market mergers to limit price hikes and require that merging entities maintain certain services. In addition, regulators could prohibit certain types of clauses in contracts between providers and insurers that may allow merged entities to leverage market power to negotiate for higher prices in one market based on their strong position in another. 7

Each of these policy and regulatory options would involve tradeoffs. For example, determining whether to challenge a given cross-market merger could entail weighing the potential benefits of a merger, such as allowing a small hospital to keep its doors open, against the potential for some harm, such as higher health care prices and potentially less access to care for patients in a given market. As the number of cross-market mergers increases, these concerns and tradeoffs are likely to be on the radar of policymakers and regulators.

This work was supported in part by Arnold Ventures. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

This brief defines cross-market mergers based on providers being in separate geographic markets. We distinguish this from vertical mergers, which occur when there is consolidation between providers that offer different services along the same supply chain, such when a hospital acquires a physician practice.

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Regulators and researchers have long grappled with how to define the boundaries of geographic markets for health care services. As a result, a merger that is considered to cross markets by some may be identified as occurring within a single market by others.

Kaiser Permanente and Geisinger are both integrated health systems that include both insurance plans and health care providers. Revenues reflect all sources of operating income.

For example, in 2015, the Federal Trade Commission (FTC) initiated a legal challenge against a planned merger between two Illinois health systems—Advocate Health and Northshore University HealthSystem—arguing that the combined entity would control over half of the market for general acute care inpatient services in the North Shore area of Chicago.  The two systems eventually abandoned their plans to merge. However, Advocate Health was later involved in two cross-market mergers—first with Aurora Health (based in the neighboring state of Wisconsin) to form Advocate Aurora Health and then with Atrium Health (based in North Carolina, South Carolina, Georgia, and Alabama) to form Advocate Health. The Federal Trade Commission investigated the latter merger, but the government did not seek to challenge either merger in the courts.

The Department of Justice (DOJ) and FTC have taken additional steps that indicate that they are taking a closer at cross-market mergers. For example: (1) in September 2021, the FTC announced that they would be considering cross-market effects in their reviews of large merger deals, (2) in February 2023 and July 2023 , respectively, the two agencies withdrew from their health care policy statements which, among other things, may have created a safety zone for large health systems to acquire small hospitals in other markets, and (3) in July 2023, the two agencies released a draft version of their updated guidelines for reviewing mergers that included language which might be used to challenge cross-market mergers (though this is not yet clear).

In July 2023, the FTC and DOJ released a draft version of their updated guidelines for reviewing mergers that included language which might be used to challenge cross-market mergers (though this is not yet clear).

This would entail banning “all-or-nothing clauses,” which require an insurer that wants to contract with a particular provider in a system to contract with all providers in that system.

• Health Costs
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Also of Interest

• Ten Things to Know About Consolidation in Health Care Provider Markets
• Understanding the Role of the FTC, DOJ, and States in Challenging Anticompetitive Practices Of Hospitals and Other Health Care Providers
• Gaps in Data About Hospital and Health System Finances Limit Transparency for Policymakers and Patients

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The Anatomy of a Failed Hospital Merger

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It was Gerhard Casper who finally pulled the plug. After months of dismal financial reports, Stanford's president called late last fall for a breakup of the two-year-old merger of the medical centers at Stanford and UC-San Francisco. "With great anguish I have concluded that, in our efforts to find bold solutions to the problems of academic medical centers, we have taken on too much," Casper wrote in an October 28 letter to University of California President Richard Atkinson.

The unprecedented merger of private and public university medical centers was supposed to help the two schools weather the financial pressures of managed care. By pooling resources and increasing bargaining power, UCSF Stanford Health Care was projected to save $256 million by 2000. But instead the company, which was set up in November 1997, lost $86 million last fiscal year. As the two medical centers prepare to formally split up, Stanford looks at why the merger failed:

Separate Staffs The venture's biggest downfall may have been that it never managed to bind the two institutions together with a common culture. Most professors continued to identify almost exclusively with their home campus. A September 1, 1999, deadline for consolidating clinical services came and went with little action. With the exception of pediatrics, doctors didn't combine their practices, share risks or pool revenue as the merger's architects had hoped they would. "We did not fully grasp the complexity of integrating two very different institutions," Casper said in an interview the month before he called off the union.

Revenue Shortfalls The economic pressures that led to the merger only increased as the new corporation got on its feet. Managed care companies continued to cut payments to hospitals while, at the same time, the state and federal government trimmed reimbursements. At the federal level, the 1997 U.S. Balanced Budget Act resulted in a $10 million drop in Medicare payouts to the hospitals. Meanwhile, the state's Medi-Cal program cut payments, making it clear that academic medical centers would have to shoulder an increasing share of the cost of treating the poor. All told, UCSF Stanford Health Care provided more than $100 million in unreimbursed care last year.

Higher Costs On top of those problems, the company's officials faced the unexpectedly daunting costs of the merger itself. For example, integrating computer systems at the two schools cost $126 million, five times what was expected. And the payroll ballooned. A state audit of the company released in August said 1,000 employees were brought on board after the merger. Proponents of the venture had projected only 200 new hires.

The Unexpected "There were a lot of surprises about the financials of the two institutions, particularly the seriousness of the financial difficulties on the [San Francisco] campus," says Larry Lewin, founder of The Lewin Group, a health care consulting firm. Lewin facilitated early discussions between the two schools but was not involved in the audits that preceded the merger. One shocker was how much money UCSF's Mount Zion Hospital was losing. Three-quarters of the $86 million in losses during the last fiscal year came at UCSF facilities. Mount Zion alone lost nearly $60 million. The hospital, which served many of San Francisco's low-income residents and was the subject of vocal support from state and local politicians, shut its doors in November.

The total price tag for the merger -- $79 million -- may pale in comparison to what it costs to unravel the two medical centers. Each school will take back the resources it brought to the marriage (Stanford put in assets valued at $458 million; UCSF put in $415 million), and then the losses are to be divided 50-50. But by the middle of November, the two sides had drawn up a seven-page memo detailing issues that still needed to be resolved. Officials hope the two centers will be separated by March 1. But it won't be easy or cheap. As Lee Goldman, UCSF's acting vice chancellor for medical affairs, quipped: "Have you ever seen a divorce that was cheaper than the wedding?"

In the end, Stanford may emerge without much injury. Although Stanford's medical services (including Lucile Packard Children's Hospital) lost $20 million last year, they are expected to make $15 million this year. UCSF's are projected to lose money at least until 2001. "It's hard to unscramble the egg," says Lewin. "It's going to be costly, but I think Stanford will come out okay."

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Health Care Access & Coverage

How For-Profit Hospitals Billed More Aggressively Than Nonprofits For Medicare Outlier Payments: A Case Study From the Early 2000s

For-profits were also likelier to spend new revenue on executive pay and share buybacks, atul gupta, phd.

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American hospitals account for the largest nonprofit sector in the United States, but while most U.S. hospitals are nonprofit, a significant portion are for-profit. Policymakers and researchers long have questioned whether nonprofit hospitals behave differently than for-profit hospitals. In a recently released National Bureau of Economic Research working paper that examines this question, we made use of a now-resolved loophole in Medicare payment policy to understand how nonprofit and for-profit hospitals exploited this loophole, and what they did with the resulting financial windfall.

What was the loophole? Medicare used hospitals’ list prices (also called “charges”) to determine how much hospitals should get in “outlier payments” — which reimbursed hospitals beyond Medicare’s usual fixed-price contract for providing especially resource-intensive care. Because the Centers for Medicare and Medicaid Services could not observe the true costs of this treatment, they relied on those list prices, giving hospitals the opportunity to inflate them.

We used a novel approach to find hospitals that gamed the system with inflated charges for outlier payments during this time period and identified 180 such hospitals. The gain for these hospitals was substantial, resulting in a windfall of $3 billion in Medicare payments and $12 billion when including all insurers’ payments over this time period. (For perspective, consider that the total spending on the Women, Infants and Children’s (WIC) program in 2022 was $6 billion.)

Both for-profit and nonprofit hospitals took advantage of the loophole. But we found that the type of ownership was highly predictive of gaming, with the for-profit hospitals more likely to exploit the loophole than the nonprofit hospitals. The for-profit hospitals also were more likely to pocket the money rather than reinvesting it in patient care.

Hospitals That Gamed the System Derived Direct and Indirect Revenue Benefits

We found that weaknesses in government contracts can produce ripple or “spillover” effects that may far exceed in magnitude the direct revenue increases, based on our comparison of the revenue trends of the “gamer” hospitals versus those of a matched set of hospitals that did not inflate list prices for outlier payments. As our analysis showed, the impact of the loophole extended beyond the increased payments from Medicare to include increased payments from private insurance too.

This spillover — adding up to $12 billion — perhaps resulted from private insurers using similar payment designs and negotiating contracts based on list prices. The higher spending by private insurers, which then likely was passed on to employers in the form of higher insurance premiums, greater cost sharing for employees, and even salary decreases, highlights the importance of considering spillover effects when determining whether investments in oversight or enforcement actions are justified.    

Nonprofit Hospitals More Likely to Use Extra Money on Operating Costs

It is unclear exactly why the for-profit hospitals were more likely to take advantage of the Medicare outlier payment loophole. We hypothesize that managers of for-profit hospitals had more incentive to maximize revenue since they could distribute profits to themselves. We also hypothesize that managers who joined nonprofits versus for-profits differed in their financial motivation.      

What is clear, though, is that the nonprofit and for-profit gamers spent the extra revenue in different ways, consistent with predictions from organizational theory. Nonprofits directed about 75% of the gaming revenue to operating costs, with no increase in compensation for senior executives. We detected a modest but statistically significant improvement in the mortality rate at these nonprofit hospitals.

In contrast, for-profit hospitals transferred all of the excess revenue off their balance sheets, with no effect on patient care. For the largest and most important gamer, the Tenet Corporation, we showed that the excess revenue dramatically increased compensation for its highest-paid executives at the peak of gaming. Compensation more than doubled, from $6 million to $12 million and stock options ballooned to $92.5 million.

The system also engaged in stock buybacks, which resulted in nearly a billion dollars transferred to shareholders. In the case of for-profit hospital systems, this evidence strongly suggests that investing in more stringent oversight is likely to carry high social value.

Loopholes Will be Exploited and For-Profit Hospitals May Warrant Greater Scrutiny

Although the findings look back to a loophole closed two decades ago, they are particularly salient now. According to the US GAO, Medicaid and Medicare made more than $100 billion in improper payments in 2023.

The issue of improper payments has taken on additional policy significance in the aftermath of large payouts to hospitals for care related to the COVID-19 pandemic. Congress authorized nearly $200 billion in pandemic-related emergency assistance for healthcare providers.

There are concerns that some hospitals and other entities abused this and other COVID-era relief programs. The appropriate policy responses — in response to such “gaming” — depend on how the marginal dollar of excess revenue ends up being allocated.

For example, if hospitals direct excess revenue to patient care, policymakers may have less to fear from loopholes. However, if the excess revenue has limited benefits for patients and workers, it would support devoting greater resources to contract design and payment oversight.

The working paper, “Turbocharging Profits? Contract Gaming and Revenue Allocation in Healthcare,” was published June 2024 by the National Bureau of Economic Research and authored by Atul Gupta , Ambar La Forgia, and Adam Sacarny.

Assistant Professor, Health Care Management, Wharton School

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The alchemists: a case study of a failed merger in academic medicine

Affiliation.

• 1 Organization and Management Studies, Association of American Medical Colleges, Washington, DC 20037-1127, USA. [email protected]
• PMID: 14604867
• DOI: 10.1097/00001888-200311000-00005

The changing environment in health care delivery and reimbursement in the United States in the late 1980s and 1990s caused a massive overhaul in the organizational structure of health care institutions. Hospital mergers were commonplace. Physician practices were bought and sold. Once stand-alone institutions developed integrated delivery systems. The academic medical community investigated and pursued a number of strategies to address changes in the marketplace, including streamlining and reengineering business practices; centralizing and integrating operations and decision making; creating separate clinical enterprises; creating new public authorities or nonprofit corporations to govern hospitals; building networks of providers; and acquiring physician practices. Perhaps the most hyped strategy was consolidation. In 1997, Pennsylvania State University's Hershey Medical Center and Geisinger Health System in Danville, Pennsylvania, announced plans to merge into one large clinical enterprise. The merger unwound three years later. Based on extensive interviews and document analysis, this case study examines six aspects of the merger and de-merger between Pennsylvania State University and Geisinger: (1) the environment and historical context that preceded the merger; (2) the reasons for the merger; (3) the structure of the merged system; (4) the outcomes for the new organization; (5) the reasons for the dissolution; and (6) the lessons learned from this series of events.

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The Alchemists: A Case Study of a Failed Merger in Academic Medicine

Mallon, William T. EdD

Dr. Mallon is director of organization and management studies, Association of American Medical Colleges, Washington, D.C.

Correspondence and requests for reprints should be addressed to Dr. Mallon, Association of American Medical Colleges, 2450 N St NW, Washington, DC 20037-1127; telephone: (202) 828-0424; fax: (202) 828-1125; e-mail: 〈 [email protected] 〉.

The changing environment in health care delivery and reimbursement in the United States in the late 1980s and 1990s caused a massive overhaul in the organizational structure of health care institutions. Hospital mergers were commonplace. Physician practices were bought and sold. Once stand-alone institutions developed integrated delivery systems. The academic medical community investigated and pursued a number of strategies to address changes in the marketplace, including streamlining and reengineering business practices; centralizing and integrating operations and decision making; creating separate clinical enterprises; creating new public authorities or nonprofit corporations to govern hospitals; building networks of providers; and acquiring physician practices. Perhaps the most hyped strategy was consolidation.

In 1997, Pennsylvania State University’s Hershey Medical Center and Geisinger Health System in Danville, Pennsylvania, announced plans to merge into one large clinical enterprise. The merger unwound three years later. Based on extensive interviews and document analysis, this case study examines six aspects of the merger and de-merger between Pennsylvania State University and Geisinger: (1) the environment and historical context that preceded the merger; (2) the reasons for the merger; (3) the structure of the merged system; (4) the outcomes for the new organization; (5) the reasons for the dissolution; and (6) the lessons learned from this series of events.

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FTC's Hospital Merger Win Streak Ends

On Monday morning, the Federal Trade Commission quietly added a sentence to its web page dedicated to the Commission's challenge of a proposed merger of two health systems in Philadelphia's northern suburbs, Thomas Jefferson University and the Albert Einstein Healthcare Network:

The Commission vote to voluntarily dismiss its appeal to the 3rd Circuit of the district court decision declining to preliminarily enjoin the merger of Thomas Jefferson University and Albert Einstein Healthcare Network was 4-0.

The unanimous decision etches in stone that for the first time in the 21st Century the FTC has abandoned litigation to enjoin a hospital merger after failing to obtain a preliminary injunction from the district court. 1  While the outcome showcases that healthcare provider transactions can overcome opposition from the state and federal antitrust enforcers, healthcare providers should expect aggressive enforcement to continue.

Just yesterday the FTC announced the end of its investigation of the proposed merger between Atrium Health Navicent, Inc., and Houston Healthcare System, Inc., because the parties abandoned the deal. That announcement comes not long after two hospital systems in Memphis, Tenn., abandoned a planned merger when the FTC sued to block their $350 million transaction.

Market Definition Central in Hospital Merger Litigation

The Jefferson-Einstein case should be somewhat heartening to hospitals and health systems in competitive urban areas. The key battleground—as in most hospital merger cases—was market definition.

The FTC defines geographic markets using the Hypothetical Monopolist Test (HMT), which assesses whether a hypothetical monopolist of inpatient hospital services could profitably raise prices if it controlled the hospitals in a defined geographic area. If so, that area is a relevant geographic market to assess the competitive effects of the merger based on market shares and concentration levels or actual effects.

The Commission's application of the HMT has produced some strange geographic markets in urban areas. For instance, the below map shows the market that passed the HMT in FTC's case challenging the proposed merger of Advocate Health Care Network and NorthShore University Health System in the Chicago area:

In Jefferson-Einstein, the district court found that the FTC's alleged markets in the northern Philadelphia area passed the HMT. The judge nonetheless held that the FTC failed to meet its burden because the alleged geographic markets did not "correspond to the commercial realities of southeastern Pennsylvania's competitive healthcare industry." 2  In particular, the district judge was not persuaded that the testimony from commercial insurers supported the markets the FTC had proposed.

It will be important to watch how the FTC reacts to the decision. The Commission argued on appeal that the results of the HMT should be sufficient to carry the FTC's burden: "Courts must consider 'commercial realities' when formulating and applying the hypothetical monopolist test… A court may not, however, jettison undisputed results of a test that already incorporates the 'commercial realities' of the healthcare market." 3

While the FTC appears committed to its current approach to market definition, expect there to be extra focus on the substance and credibility of payer testimony in hospital merger litigation ahead. Next up is the FTC's challenge to the proposed merger of New Jersey hospital systems Hackensack Meridian Health, Inc., and Englewood Healthcare merger, which is slated for trial in June 2021.

FTC Remains Committed to Enforcement in Healthcare

The Commission's decision to abandon the Jefferson-Einstein appeal was not terribly surprising, given the 3rd Circuit denial of the FTC's request to enjoin the merger while the appeal was pending. 4 The parties were free to close the deal and begin integrating while the appeal was underway, and reached an agreement with the Pennsylvania attorney general in January 2021 to drop its challenge to the transaction in exchange for a commitment to invest at least $200 million in Einstein's facilities. Even if the FTC had won the appeal, it could have ended up in protracted litigation about whether (and how) to "unscramble the eggs." 5

The FTC's first loss in two decades comes as the FTC has committed to aggressive antitrust enforcement in healthcare. Acting Chair Rebecca Slaughter and Commissioner Christine Wilson have both been outspoken about the Commission closely scrutinizing every hospital merger.

The FTC also recently authorized a retrospective on the consolidation of physician groups into the health systems. 6  It is worth noting that after the FTC conducted a retrospective of hospital mergers in the early 2000s it emerged with a new approach to analyzing and challenging hospital mergers, which fueled the long winning streak that has now come to an end.

With that history in mind, it would be a mistake to read the FTC folding its hand in Philadelphia as a sign of less aggressive enforcement ahead. Just the opposite—expect redoubled enforcement efforts in healthcare, including increased focus on physician transactions.

1   A few years ago when the FTC initially lost two preliminary injunction proceedings in hospital merger cases at the district court level, the 7th Circuit and the 3rd Circuit both enjoined the mergers pending appeals. The FTC ultimately won both of those appeals and prevented hospital mergers in the Northern suburbs of Chicago and in the greater Harrisburg, Pennsylvania area. See Federal Trade Commission v. Penn State Hershey Medical Center, 838 F.3d 327 (3d Cir. 2016); Federal Trade Commission v. Advocate Health Care Network, 841 F.3d 460, 476 (7th Cir. 2016). 2   Memorandum Opinion, Federal Trade Commission and Commonwealth of Pennsylvania v. Thomas Jefferson University and Albert Einstein Healthcare Network, Civil Action No. 20-01113, Dkt. No. 277, at p. 3 (E.D. Pa. December 8, 2020). 3   Emergency Motion of Federal Trade Commission for an Injunction Pending Appeal, FTC v. Thomas Jefferson University, No. 20-3499 (3d Cir. Dec. 11, 2020). 4   Order Denying Emergency Motion of Federal Trade Commission for an Injunction Pending Appeal, FTC v. Thomas Jefferson University, No. 20-3499 (3d Cir. Dec. 22, 2020). 5   For instance, the FTC spent years challenging Phoebe Putney Health System's acquisition of Palmyra Park Hospital in Albany, Georgia, and resolved the case without a divestiture because of concern that Georgia's Certificate of Need laws would effectively preclude the FTC from achieving that remedy. https://www.ftc.gov/enforcement/cases-proceedings/111-0067/phoebe-putney-health-system-inc-phoebe-putney-memorial . 6   https://www.ftc.gov/news-events/press-releases/2021/01/ftc-study-impact-physician-group-healthcare-facility-mergers .

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