Kaufman Hall Report Examines Financial Effects of Blocked Hospital Mergers

A new Kaufman Hall report argues that antitrust review of hospital mergers focuses too narrowly on commercial insurance pricing impacts and overlooks effects on Medicare and Medicaid patients, who represent nearly 60% of acute-care hospital patient days. The report finds that among 88 canceled hospital transactions, potential acquirees experienced a median 50% reduction in operating profit margin and 38% reduction in days cash on hand in the following year. The analysis shows hospitals seeking acquisition serve communities with higher vulnerability and higher Medicare/Medicaid patient shares than their prospective acquirers, and that facility closures or service reductions following blocked mergers may disproportionately affect Medicare and Medicaid beneficiaries whose access to care is at risk even though government-set rates would not change.

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