HEALTH CARE
Over the past three decades, an increasing number of so-called integrated health systems have gobbled up once-private hospitals and physician groups under the promise that consolidation would improve care and reduce costs. Common sense alone would tell you that premise is faulty. Competition and choice result in better services and lower prices. But economists and policymakers alike believed there was something different about health care, something that inoculated it from the basic laws of economics.
A study that appeared last year in JAMA put that idea to rest, however. Titled “Organization and Performance of US Health Systems,” the study shows that integrated and consolidated health systems have improved care only “marginally” and have not reduced costs at all.
“One of the key arguments for hospital mergers and practice acquisition was that health systems would deliver better-value care for patients. This study provides the most comprehensive evidence yet that this isn’t happening,” said Nancy Beaulieu, a research associate in the Department of Health Care Policy in the Blavatnik Institute at Harvard Medical School, and one of the authors of the study.
Why don’t consolidated health systems end up lowering costs? Because growth is expensive. And when a hospital system’s business priority is expansion rather than patient needs, it must fuel that growth with capital, which ultimately comes from customers, which in this case are employers and patients. Today, 30% of Americans’ health spending is on hospital care, by far the largest category.
The study puts Beth Israel Lahey Health (BILH) system’s acquisition of Exeter Hospital last year in a new light. Upon announcing the acquisition, Exeter Health Resources and BILH stated, “with this transaction, BILH will extend its integrated care model and expertise to Southern New Hampshire.” Exeter Health Resources, which includes Exeter Hospital, Core Physicians and Rockingham Visiting Nurses Association & Hospice, joined BILH’s sprawling family of hospitals and physician practices in July of 2023.
BILH has recently announced a plan to spend $400 million “to buy, build, expand, remodel, and renovate facilities at multiple locations across its health care system.” Meanwhile, ten of the health system’s executives enjoy seven figure compensation packages. And its expenses have grown from $48 million in 2019 to $452 million in 2022.
Suddenly, we see the perpetual growth machine in action and up close. The significant majority of BILH’s hospitals are located in Massachusetts. Yet, Granite State employers and patients will have to foot at least part of this bill. It’s a fairly common practice for corporations to diffuse costs as widely as possible. But that should not include increasing health care costs here in New Hampshire to pay for corporate growth in the Bay State.
New Hampshire policymakers and regulators should watch carefully to ensure BILH doesn’t attempt to use the Granite State as a piggy bank to finance their aggressive Massachusetts-based expansion plan.
Jennifer Nunez served as the director of emergency
