As Hospitals Consolidate, Medicaid Patients Have Fewer Options

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[MM Curator Summary]: When hospitals acquire other hospitals to increase revenues and profits, somehow Medicaid member access gets even worse. Wonders never cease.



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A new research brief finds Medicaid admissions decline as hospital markets get more concentrated, but hospitals question the analysis.


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September 28, 2023 – Access to care for Medicaid patients declines as hospital markets become more concentrated following mergers and acquisitions, a new research brief from the National Institute for Health Care Management (NIHCM) Foundation suggests.

The research brief finds the average hospital reduced admissions for Medicaid patients when markets became more concentrated. The finding indicates potential limitations on access to care for lower-income individuals, says lead researcher and health economist Sunita Desai, PhD, of the New York University School of Medicine.

Desai analyzed data between 2006 and 2012 from the Healthcare Cost and Utilization Project State Inpatient Databases for New York State, the American Hospital Association Annual Survey, and data on hospital mergers.

The average hospital’s measure of market concentration increased by 7 percent during that time, Desai reports. With every 1 percent increase in a hospital-specific measure of concentration, there was a 0.59 percent decline in all Medicaid admissions and, specifically, a 1.3 percent decline in birth admissions. The study analyzes births separately, as they account for the most frequent Medicaid admissions.

“Policymakers and regulators should consider potential impacts on care and access for Medicaid patients when reviewing mergers or developing policy responses to hospital concentration,” Desai writes. “Moreover, given Medicaid patients are more likely to go to public hospitals, investments in the public hospital systems may be warranted in response to growing market concentration.”

Non-profit hospitals are particularly impacted by hospital market concentration with greater consolidation associated with a decline in Medicaid volume for non-profit organizations. Meanwhile, Medicaid volume increased for public hospitals, according to the research brief.

The finding suggests that non-profit hospitals are not necessarily investing increased profits they receive from higher commercial reimbursement rates into care for low-income populations that require a safety net, the research brief explains. Hospitals generally receive 90 cents for every dollar they spend on treating Medicaid patients, significantly less than what they receive for treating commercially insured patients.

The American Hospital Association (AHA), however, claims the research brief is a “bias-riddled ‘study'” that deflects from the effects payer concentration has on access to care.

“Instead of continuing to myopically focus on the hospital field, researchers should look at broader factors, like how commercial health insurers dominate every market in the U.S. and use that market power for their own enrichment,” Melinda Hatton, AHA’s general counsel and secretary, says in a statement.

“This market domination often comes at the expense of patients. Government reports confirm that some commercial health insurers leverage their market power to put in place policies that delay or deny patient care, inappropriately withhold reimbursement to providers and burn out doctors and nurses,” Hatton continues.

AHA-published research has linked hospital mergers and acqusitions to increased access to high-quality care.