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Integration, Employer Costs Will Be Focus of Coming Fight in DC

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The heavy press is on in Washington, DC, as employer interest groups lobby legislators to take action on a pair of issues critical to hospitals: health care costs, which many see as driven higher by increased system integration, and the growing expenses for employers to provide health insurance as a result of those higher costs. 

Setting aside the dubious premise that hospitals are responsible for growing costs (as opposed to the growth in input prices of things like labor, pharmaceuticals, medical devices, plant maintenance, construction, and more), there is growing attention to integration and it will be a debate for which hospitals and health systems must be ready. 

A late May article in The New York Times claimed that COVID-19 relief funding enabled large hospital systems to “[expand] even more by scooping up weakened competitors and doctors’ practices.” And academics are increasingly critical of affiliations — an article this week in Modern Healthcare quotes Lawton Robert Burns, professor of healthcare management at the Wharton School: “People are beginning to understand that mergers don’t bring about cost reduction.” 

And some legislators are picking up on these issues, with two members of Congress already calling for both the Federal Trade Commission and the Department of Health and Human Services to “identify if any CARES Act funds were used to engage in consolidation, and if any were used to finance potentially anticompetitive behavior.”  

Working with the American Hospital Association (AHA), responses to these claims are already being circulated. 

AHA’s response to the Times focuses on hospitals’ appropriate use of CARES Act funds and their real need for financial help, noting that COVID-19 relief came nowhere close to filling the financial gap — more than $320 billion nationwide in 2020 and as much as $122 billion projected for this year. And the suggestion that recent federal funds stimulated acquisitions belies the obvious point that any affiliations take months and even years to plan, discuss, and execute. 

AHA’s response to calls for investigation of the use of relief funds is captured in a comprehensive letter to the members of Congress, highlighting the extensive oversight and reporting requirements for these federal resources. The other point being emphasized is that while hospitals were answering the call to the pandemic, working the problem, and saving lives, it’s clear that others were building a stockpile of ammunition to take swipes at health systems, which in many places throughout the nation were the heroes of the pandemic. 

CHA is working closely with our federal peers to make sure key legislators understand the value of health systems, especially given all we’ve learned during the pandemic. And, when the time is right, we will ask you to elevate your voices to make sure the public also understands why systems are such an invaluable part of our nation’s health care tapestry.