By SUSAN ADELMAN, MD
On Oct. 19, 2023, the Free Press announced that Henry Ford Health and Ascension Michigan would form a joint venture. This will join Ascension’s Southeast Michigan hospitals with the Ascension Genesys Hospital in Grand Blanc and the Henry Ford hospitals, creating a system with more than 550 sites of care. Among the eight Ascension hospitals are two Providence Hospitals, St. John Hospital, two Macomb Oakland Hospitals, River District Hospital, and the Brighton Center for Recovery. Joining them will be five Henry Ford hospitals and Health Alliance Plan. This all must pass antitrust review, but I cannot recall any of the mergers in Michigan failing to get approval.
Remember, the Beaumont Health and Spectrum Health systems merged in 2022 to form what is now Corewell Health. This included Beaumont Hospital Royal Oak, Oakwood Hospital (Beaumont Hospital Dearborn), and the Beaumont hospitals in Grosse Pointe, Farmington Hills, Troy, Big Rapids, Blodgett, Butterworth, the Helen DeVos Children’s Hospital, plus 17 more hospitals in western Michigan.
Meanwhile, Trinity Health of Livonia, which itself was a merger of the Holy Cross and Mercy hospitals, has joined several other Catholic institutions to form MercyOne, which now operates 420 medical facilities, largely in Iowa but also beyond. And the eight hospitals of the Detroit Medical Center (which came together in 1985) were purchased by Vanguard, whose holdings were acquired by Tenet in 2013, forming a huge system, since Vanguard had owned 28 hospitals in multiple states, and Tenet had 49 hospitals. Oh, and the University of Michigan Hospital system merged with the six hospitals of the Lansing-based Sparrow Hospitals in April 2023, forming an 11-hospital system.
Why all this? The recent mergers are a response to Obamacare’s arcane rules that tried to cap profits, using a required medical loss ratio. Huh? Look it up. I cannot summarize it here in this short article.
All of this resembles a fish swallowing a minnow, then being swallowed by a bigger fish, which is swallowed by an even bigger fish, until ultimately, they all are swallowed by a whale. And that whale is what we poor doctors and patients must deal with. But before we get to that, a few general observations. In the 1980s, I was medical director for the DMC contracting organization known as Coordinated Health Care (CHC). The idea was to handle the contracting between the DMC hospitals and major HMOs. I learned a lot.
Watching the HMOs, I saw that if a large nationwide HMO with shaky finances tried to improve its bottom line by acquiring one or two smaller HMOs that were in debt, the whole lot of them would go under. As healthcare institutions, we learned that even the best of contracts will be vitiated if a larger HMO buys a smaller one with which we had negotiated a contract, even if we had been told that the new HMO would honor our earlier contract. Okay, maybe we should have foreseen that, but we did not. We also learned that the top management did the negotiating for an HMO, but it was middle management or below that would implement the provisions day-to-day. Therefore, if we had a good contract with HMO X and that HMO was bought by HMO Y, the working peons at HMO Y would say that they had to follow their own company’s standard procedures. They could not change just because we had an agreement with a predecessor. The result could get ugly.
Late in my career, my solo practice was purchased by a major university department of pediatric surgery. My secretary found out immediately that she was responsible to the secretarial pool of the university, not to me anymore. If I wanted to give pro bono care and the university did not condone it, she could not book the visit. Rules are rules. Exceptions? No. While previously I had operated at multiple hospitals, I became associated with one system and an intruder at others. Referrals were to go to specialists within my system, even though I knew that my lower income patients would never be able to get to my system’s main hospital.
What I fear now is that some of these new merged conglomerates will discontinue money-losing, but essential, services like maternity or pediatrics. Next, will they bow to the pressure to close smaller hospitals that are not profitable? Again, this hurts low-income patients the most.
Perhaps larger hospital systems have enough market power to bargain down prices when negotiating with insurers, but this benefits the hospitals, not the patients. They also might contract with outside vendors – as some already have – to provide emergency room or anesthesia services, choosing groups for cost more than quality. It certainly means that huge whale-like hospitals will raise their own charges, leveraging their size. This helps neither patient nor doctor, just hospitals—and it raises the costs of the whole regional system.