2. Mergers don’t lower some hospital costs
New research suggests hospitals aren't saving a lot of money on routine expenses after they merge with or acquire other hospitals, Axios’ Bob Herman reports this morning.
Why it matters: Lowering costs is one of the primary justifications hospitals give for consolidating, but this developing research indicates that argument doesn't carry a lot of weight.
By the numbers: Hospitals that were acquired in the past several years saved an average of 1.5% annually on supplies, devices and other equipment, according to the study. That equates to just a fraction of the savings that hospitals touted as a benefit of their mergers.
- Hospitals have argued that bigger systems will have more negotiating power for the things they have to buy, which will lower costs overall.
- Most of the savings the study identified came from reduced prices for items like spine and joint devices. But costs were not significantly lower across the board.
What they’re saying: "We view this potential 'synergies on input cost' argument much more skeptically now than going into this study," said Matt Grennan, study author and a health care management professor at the University of Pennsylvania.