SALISBURY TWP., Pa. — News of a potential merger between Lehigh Valley Health Network and Thomas Jefferson University Hospitals may spark concern of higher health care costs and job losses.
And an organization that has studied health care consolidation said it has found that to be true.
But LVHN's chief executive officer said that while there are examples of costs increasing during mergers, there are reasons for it, and it isn't always true.
He also said he believes the research doesn’t consider the long-term data.
Lehigh Valley Health Network on Tuesday announced the plans to merge with Philadelphia-based Thomas Jefferson University Hospitals.
If approved, the partnership would result in a health care behemoth with 30 hospitals and more than 700 outpatient care sites.
The merger could happen within a year.
"Consolidation tends to lead to higher prices, without evidence that there are increases in the quality of care."Zachary Levinson, KFF Project Director
KFF Health News, formerly known as the Kaiser Family Foundation, has researched health care consolidation and its
impact on prices and quality, as well as the role of federal and state regulators are in monitoring these mergers.
It also looked at data on the implications of mergers that cross different geographic markets.
“Even though these health systems and providers might be operating in different markets, there has been some research that can show that they still may tend to raise prices after merging,” KFF Project Director Zachary Levinson said.
He said the Lehigh Valley/Jefferson merger sounds similar to what his team has researched.
“There's a substantial body of research that has evaluated the effects of consolidation and this has shown that consolidation tends to lead to higher prices, without evidence that there are increases in the quality of care that patients are receiving,” Levinson said.
'Those reports are myopic'
Levinson said there have been a few theories about why that could be.
“Primarily an issue for health systems acquiring a smaller hospital, for example, the one health system might bring its greater bargaining experience to negotiate for higher prices,” he said.
“There's also some kind of anti-competitive concerns that, for example, if an employer is looking for a provider network that crosses different markets because they have employees that work in different areas of the state, that the merger might increase the leverage that the combined entity has relative to this large employer."
LVHN Chief Executive Officer Brian Nester said he believes the research doesn’t consider the long-term data.
“But it's the standard of care, it takes a long time to bring organizations up to a standard of care that they've maybe been behind on for years.”LVHN Chief Executive Officer Brian Nestor
Nester said that, in short, costs go up because oftentimes mergers are happening in communities that are in need of healthcare investment.
“You don't want to go, for example, and get a mammogram on a machine from 1985," he said. "You want a 3D mammogram and you deserve a 3D mammogram that costs hundreds and hundreds of thousands of dollars to do that.
“But it's the standard of care, it takes a long time to bring organizations up to a standard of care that they've maybe been behind on for years.”
Nester said that's something LVHN already has done in places such as Schuylkill County to increase access to care and bring those communities the latest in health care technology.
“So yes, costs will go up and it takes time to bring quality of service up, as well," he said.
"So I think those reports are myopic. They look in the short term, they're not looking in the longer term, and right now we've made those turns in most of those communities, but it's been hundreds of millions of dollars of investment.”
'That might be concerning'
Nester said he doesn't believe the potential merger would raise costs for patients because LVHN already is building a sound clinical delivery system and Jefferson will bring its insurance mechanism to the table in hopes of bringing value to patients.
Nester said Tuesday that a key motivation behind the merger for LVHN is the insurance program that Jefferson already has.
"The competencies we're building will definitely control costs for those people most vulnerable, because we're actually going to give them more services to keep them healthy,” Nester said.
"So for example, wages for nurses tend to go down when hospitals consolidate. So that might be concerning, especially if there's some overlap in the markets that these two health systems are serving."KFF Project Director Zachary Levinson
Levinson said there are a few things patients should keep an eye on as the merger plays out.
"I think patients and consumers should be watching the effect that this has on the prices that are being charged," he said.
"And some of that might not be transparent to patients, but it will be transparent to their insurers and will eventually be reflected in higher premiums and potentially higher out of pocket spending."
Levinson said there isn't as much data available on the effects mergers have on jobs at the acquired hospital, but said there were some findings.
“There has been one study showing that when hospitals merged, that also increased their leverage relative to their employees," he said.
"So for example, wages for nurses tend to go down when hospitals consolidate. So that might be concerning, especially if there's some overlap in the markets that these two health systems are serving."
LVHN in October announced it was laying off 240 employees in what it called a restructuring, officials said.
In a statement at the time, LVHN said the move would “allow the organization to grow in areas where the community needs services" and "right-size in areas where demand is not as great.”
Tuesday's merger announcement did not address the layoffs.
The next step for the LVHN/Jefferson merger is for the two to reach a formal agreement. Then paperwork will be submitted to the Federal Trade Commission, the Pennsylvania Attorney General’s Office and the governor.
