Consolidation in the hospital world: not only in Spain

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The New York Times of July 16, 2013 reports what has been the latest and most notorious hospital merger in the United States, nothing less than that of two New York City giants: Mount Sinai Medical Center and Continuum Health Partners.

The new company will have 3,300 beds on seven campuses scattered throughout Manhattan, Brooklyn and Queens, making it the largest hospital system in New York City, apart from the public. It will eclipse the current giant Presbyterian Hospital with 2,600 beds.

This consolidation follows a trend for hospitals in the US, according to PwC, quoted in the New York Times article, which says it will ultimately lead to higher prices for consumers.

Mount Sinai CEO Dr. Davis says the merger will allow hospitals to be “more efficient than they are.” Combining Mount Sinai’s specialty care with Continuum’s primary care will create “an integrated system that will allow patients to be cared for throughout the cycle of their problems.”

According to Dr. Davis, the Federal Trade Commission, which reviews competition issues, has already approved the operation.

While the merger may be a success for hospitals, it may lead to higher prices for consumers, as it increases bargaining power with insurance companies, resulting in more expensive policies.

The real question is whether, after the merger, the new hospital network becomes a must-have, a service that all insurers must have, if they want to remain in the market.

According to Prof. Gayner, the evidence says that these processes raise prices by 20 to 50%.

Karen Ignagni, CEO of the American Association of Health Insurers, says that “the promises are usually more efficient, but the reality is higher prices for consumers.”

However, Dr. Davis, CEO of Mount Sinai, says: “In all of our financial models we have not contemplated any rate increases.”

Interesting debate in the United States, which may not be so far from the situation in Spain. We will follow it with interest, there and here.