Editorial Roundup: Health care mergers not usually good for consumers

Published 8:50 pm Tuesday, December 6, 2022

Health care consumers and businesses should be wary of a proposed mega merger between two large health-care systems in Minnesota and South Dakota.

Fairview Health Services of Minneapolis and Sanford Health of Sioux Falls in November announced an intent to merge, citing, as always, efficiencies and improved patient care. But experts who study the economics of health care disagree, according to a report in the Star Tribune.

They say health care mergers like this almost never benefit consumers and studies have shown they actually increase costs and prices to business and patients.

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The two systems operate in different areas, with Fairview serving the Twin Cities and Sanford serving South Dakota and greater Minnesota, where it has 19 hospitals and 70 clinic locations. It has nine clinics in southwestern Minnesota; the closest one to Mankato is at Mountain Lake. The combined organization would control 50 hospitals, include 78,000 employees and be run from Sioux Falls.

Gov. Tim Walz said recently he was more receptive to hearing about the merger compared to 2013 when the state and Gov. Mark Dayton frowned upon the idea, and legislators even put forth proposals to stop it as they opposed an outstate entity taking over the University of Minnesota’s training hospital owned by Fairview.

The need for maintaining and stabilizing rural health care appears to be driving the interest of Walz and Attorney General Keith Ellison, who plans to have hearings in rural areas on the proposed merger. The state can’t stop the merger with anything short of legislation, but Sanford pulled out of the 2013 deal saying it didn’t want to go where it wasn’t wanted.

Rural health care is a legitimate concern. There are several examples, including in Albert Lea, of big health care providers pulling services from small towns.

But experts in health care economics say the overriding reason for these mergers is to increase the bargaining power health care providers have with insurance carriers. Fewer providers leaves insurance carriers with less leverage in negotiations because they must provide some kind of insurance to their customers.

That desire for negotiating power drives these mergers “across the board,” according to RAND Corp. health-care economist Michael Whaley, speaking to the Star Tribune.

The research on health care mergers shows they drive up prices with no increase in quality, U of M health economist Bryan Dowd told the Star Tribune.

Chief executives of the health care systems dismissed that idea in an earlier interview with the Star Tribune saying they’re not trying to gain market power, but mainly make care more affordable. Consumer and political leaders should take that statement with a shaker full of salt.

Merging companies can bring some change in staffing and efficiencies but it really doesn’t change the motive to have a healthy bottom line. In fact, it may increase pressure on containing costs and profit incentive.

Health care is not Walmart. Businesses and consumers cannot easily change suppliers or go to Target when their health care becomes unaffordable or their insurance company removes a clinic from its approved providers list.

Health care is a community good, and if prices increase beyond affordability, it creates all kinds of other costs including costs of government program health-care safety nets.

And employers should be wary of this merger also. Any increase in health care costs for employees will only exacerbate existing pressure for higher wages in a tight labor market.

Of course, insurance companies have no history of white knighthood, and Minnesota should do all it can to expand competition among insurance companies and health-care providers.

Supporting rural health care has merit, but we should never create a situation where health care can only be purchased from a few sellers.

The Free Press, Mankato, Dec. 4

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Editorials from newspapers around the state of Minnesota.

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