What you need to know about Mergers in 2016

Hunter Frint

Five recent healthcare mergers and contracts
Becker’s Hospital Review announced five healthcare transactions that took place on March 21.
1. Atlantic Health System expands practice in New Jersey.

New Jersey-based Atlantic Health System extended its reach by acquiring Hackettstown Regional Medical Center.
2. Walgreens partnered with UnitedHealth’s pharmacy branch.

UnitedHealth’s pharmacy care services combined with Walgreens to open thousands more locations for people to get prescriptions filled and receive clinical guidance.

3. A West Virginia hospital merger cleared a regulation obstacle, but still faces opposition.

This merger has yet to be finalized, but the West Virginia Health Care Authority approved the merger of Cabell Huntington Hospital and St. Mary’s Medical Center in Huntington, West Virginia.

4. In Ohio, Mercy Health along with Henry County Hospital signed an affiliation agreement.

According to Fox 19 Now, the agreement between Mercy Health in Toledo, Ohio and Henry County Hospital in Napoleon, Ohio means that Henry County Hospital will remain independent, but will join the Mercy Network.

5. Group Health approved a $1.8 billion acquisition by Kaiser.

A Seattle, Washington-based company decided to join with Kaiser Permanente in Oakland, California. The billion-dollar funds obtained through this acquisition are planned to go toward the establishment of a new nonprofit community foundation in Seattle, according to Becker’s Hospital Review.

Prices rise within state when cross-market mergers occur
According to an article from Becker’s Hospital Review, a study led by Professor Leemore Dafny, PhD, has finally confirmed a long suspected trend in the healthcare industry. Dafny is a professor and the director of health enterprise management at Northwestern Kellogg School of Management in Evanston, Illinois.

Her study proved that cross-market mergers result in increased prices. After the examination of over 500 mergers over a period of 12 years (2000-2012), the study concluded that cross-market mergers caused price increases of 6-10 percent.

The hospital mergers that the study focused on were those involved with transactions in the same state, but different markets. According to Marketplace, these cross-market mergers are not examined with enough skepticism at the state or federal levels, but “some economists are worried regulators will use such findings to prevent reasonable mergers from going through,” according to Beckers.

“I can tell you in general why the cross-market mergers may be bad, but I don’t think we can say which one is good and which one is bad,” Greg Vistness, PhD, and economist with Charles River Associates told Beckers.

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