SCL Health, Intermountain Healthcare promise lower costs and better quality from merger


Hospital mergers generally haven’t brought health care costs down, but there’s some reason to think the new owners of SCL Health’s facilities in Colorado might be able to do something different.

Broomfield-based SCL Health, which owns four Colorado hospitals and four more in Montana, merged with Utah-based Intermountain Healthcare, a system of 24 hospitals, last week after receiving approval from the Colorado Department of Law.

Normally, mergers lead to higher hospital prices as larger systems gain market share and can demand higher payments from insurers, said Nancy Dolson, special financing division director for the Colorado Department of Health Care Policy and Financing.

But Intermountain’s unusual structure, which includes both hospitals and an insurance division, has offered Utah residents a lower-priced option, which they might be able to replicate in Colorado, she said.

“It’s definitely something that we will be watching,” she said. “Intermountain may not be a normal player.”

SCL’s hospitals — which now will operate under the Intermountain banner — are Saint Joseph Hospital in Denver, Good Samaritan Medical Center in Lafayette, Lutheran Medical Center in Wheat Ridge and St. Mary’s Medical Center in Grand Junction.

Dr. Marc Harrison, CEO of Intermountain, said SCL Health was an attractive merger partner because they’d already taken steps to control costs, offer high-quality services and had leadership that was interested in moving away from the “fee for service” model, where doctors and hospitals are reimbursed for every visit and procedure.

Intermountain’s insurance division, called SelectHealth, moved most of its payments to a system where providers are given a budget to care for each patient. That gives them an incentive to try lower-cost options, such as physical therapy for back pain, before resorting to more-expensive and potentially riskier options, like surgery, Harrison said.

“It sort of aligns the incentives around keeping people well,” he said.

It’s not clear how the combined hospital system will implement similar payments in SCL’s hospitals, since SelectHealth doesn’t sell insurance in Colorado. Harrison said the process of transitioning is just starting, since the systems weren’t allowed to share certain information before the merger, but the plan is not to disrupt existing relationships with providers and insurers.

“Now that we’re one organization, we can continue to look at things very strategically,” he said.

When a hospital system also owns an insurance plan, it has an incentive to charge itself lower prices than it would charge other insurance companies, which allows it to charge lower insurance premiums, said Kim Bimestefer, executive director of the Department of Health Care Policy and Financing.

If Intermountain decides to start offering insurance on the Western Slope to go with its ownership of St. Mary’s, that might give people in the surrounding counties a lower-cost option, she said.

“If they bring that skill set to the Western Slope… it might actually bring overall health care costs down,” she said. “If they don’t, we’re in for the same old story.”

Mergers typically don’t lower prices

When hospitals merge, they typically cite a desire to lower costs and improve quality. Most studies of hospital mergers don’t point to significant benefits for patients, though relatively little research has been done about cross-state mergers, like the one between SCL and Intermountain.

A 2021 report by the Department of Health Care Policy and Financing pointed to consolidation as one factor in Colorado’s above-average hospital prices, which were the sixth-highest in the country as of 2018 and are still in the top 10, Dolson said.

The number of hospitals in Colorado that were part of health systems increased from 24 in 2009 to 41 in 2020, and generally, system hospitals have higher prices and profits than those that are independent.

Most studies have found that when hospitals in the same area merged, prices went up faster than in non-merging hospitals, and that their costs remained largely unchanged. Other research, conducted for the American Hospital Association, found costs went down. Whether a hospital had been part of a recent merger didn’t appear to have any effect on patients’ odds of dying.

Allan Baumgarten, an analyst who studies health care markets in Colorado and five other states, said that as hospitals merge within the same market or the same state, prices tend to rise because they have the power to negotiate higher rates with insurers. There’s not nearly as much data on mergers across state lines, but combining systems could still give them more power, since companies with workers in both Colorado and Utah would risk losing access to more hospitals if their insurance companies don’t make a deal with Intermountain, he said.

It’s possible that some mergers do produce efficiencies and lower costs, but those aren’t necessarily passed on to patients, Baumgarten said. It’s also difficult to square the desire for efficiency with commitments to protect jobs, and most systems eventually consolidate their administrative offices and departments like purchasing, he said.

The Colorado Hospital Association pushed back against the idea that patients don’t benefit from mergers. In a statement, the group said that there’s no proof of a link between mergers and higher prices, and that joining forces can produce more efficient systems and protect access to care.

“Health care value in our state has certainly been impacted by some of the recent merger and acquisition activity, with many hospitals able to retain certain locations or services or add to what they offered before, after partnering with a health system,” the statement said. “It’s important to remember that cost is not the only component of health care value, but that we should also consider quality, service and access for all Coloradans, regardless of race, gender or economic status.”

Looking to bundled payments, digital tools

Intermountain’s Harrison said the plan to reduce costs doesn’t rely on playing hardball with insurers or consolidating back-office operations.

After the shift to value-based payments at Intermountain, providers were more focused on keeping patients’ conditions from escalating, and hospitalizations dropped by about 60% for patients covered by Medicare and 25% for patients covered by private insurance. That saved money and made both patients and providers happier, he said.

Source link

Denial of responsibility! Planetconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment