Researcher: Ga. Hospital Mergers Could Bump Prices For Patients

At an event celebrating the new hospitals, WellStar President and CEO Candice Saunders was decidedly vague about the network’s plans to grow. She didn’t rule out the possibility of more mergers down the line.

“Our board’s direction is that we will continue to look at partnerships,” she said.

Saunders also left open the possibility that WellStar could look to once again get back into the health insurance market with its own plan.

“We will continue to look at all options. As you look around the country, we continue to learn from each other,” Saunders said.

Both avenues are major trends in health care right now as hospitals look to keep their costs down, improve quality and negotiate better deals with insurance companies, which are also consolidating. The consolidation of health systems is largely tied to the Affordable Care Act, as they grapple with increasing changes to reimbursements for care.  

Northwestern Kellogg School of Management’s Leemore Dafny recently co-authored some new research that found when health systems expand to different markets in the same state, like in the WellStar deal, prices tend to go up.

Her study looks at about 500 hospital mergers from 2000 to 2012.

“The acquiring system’s prices go up by 6 to 10 percent, which is not trivial,” Dafny said, adding patients are also paying more out of pocket for health care in the way of higher premiums and deductibles.

Dafny said those are the sorts of price bumps that tend to concern regulators like the Federal Trade Commission, but there’s been a lack of evidence to prove cross-market mergers could create anti-trust concerns. She said health care observers have assumed prices go up with these kinds deals, but her research puts a number on it.

Saunders of WellStar said the health system will continue to “make sure health care is affordable,” but didn’t elaborate.

But to Dafny, “If the objective of size is to counterbalance the market powers of insurers, that means they would like to increase prices.”

WellStar isn’t the only Georgia hospital system that’s looking to get bigger. Piedmont Healthcare is in discussions with Athens Regional Health System for a possible merger, and the six-hospital system recently joined with Newton Medical Center. Northside Hospital and Gwinnett Medical Center have also announced merger plans.

As for whether WellStar will attempt to roll out its own insurance plan, Dafney said WellStar’s 11 hospitals make it big enough to consider that kind of venture on its own.  

Last year, WellStar folded a Medicare Advantage Plan it operated with Piedmont.