Healthcare industry consolidation has mirrored trends in other sectors — promising efficiencies and stability but often delivering reduced competition, higher costs and limited access to care.
"Large scale consolidation/mergers that have been seen in other industries such as healthcare hospital providers, banking, retailing and pharmacies with the promise of improved efficiencies, financial stability, personalized car, and regional dominance has taught us that we shouldn’t be sold on the notions that organizations become too big to fail or bigger is better," Joe Peluso, administrator at Aestique Surgical Center in Greensburg, Pa., told Becker's. "Through these transactions independent entities have been left struggling to compete and have left communities with fewer choices, reduced access, increased costs, reduced services and closures which have affected the overall quality of life and economics of communities."
Here’s 10 things to know about the ongoing effects of hospital mergers on ASCs, physicians, and the communities they serve.
1. Hospital mergers and acquisitions have increased steadily over the last 20 years, with a notable acceleration since 2010. While the COVID-19 pandemic temporarily slowed consolidation, the trend has rebounded and continues to gain momentum.
2. Cross-market mergers and acquisitions are becoming more common as health systems seek to diversify portfolios, strengthen bargaining power and achieve economies of scale amid financial pressures.
3.Pennsylvania has seen more merger and acquisition activity than any other state, with seven hospital and health system deals announced or completed this year. For example, Risant Health, part of Kaiser Permanente, acquired Danville, Pa.-based Geisinger Health, a 10-hospital system, on March 31. Oakland, Calif.-based Kaiser said Risant plans to acquire four to five more community-based health systems over the next four to five years.
4. Here are five major deals this year:
- Dallas-based Tenet Healthcare agreed to sell its majority interest in Birmingham, Ala.-based Brookwood Baptist Health for $910 million in cash.
- St. Louis-based Ascension sold Our Lady of Lourdes Memorial Hospital System in Binghamton, N.Y., 50% of its stake in Network Health in Wisconsin and all assets and operations associated with Providence Hospital in Mobile, Ala.
- Novant Health on Feb. 1 completed its $2.4 billion acquisition of three hospitals along with their affiliated physician clinics from Tenet.
- Philadelphia-based Jefferson and Allentown, Pa.-based Lehigh Valley Health Network signed a definitive agreement May 15 to merge into a 30-hospital system with more than 700 care sites.
- BJC HealthCare St. Louis merged with Saint Luke's Health System earlier this year, creating a 28-hospital system with $10 billion in revenue. Their reach extends to more than 6 million patients across Missouri, Illinois and Kansas.
5. Under Chair Lina Khan, the Federal Trade Commission has intensified scrutiny of healthcare mergers. Several deals have been blocked since 2020, prompting health systems to look beyond their traditional service areas for expansion opportunities.
6.The FTC has prevented multiple high-profile mergers, including proposed deals involving John Muir Health and Tenet Healthcare, Steward Health Care and HCA Healthcare, and RWJBarnabas Health and Saint Peter's Healthcare System.
7. As large healthcare entities expand, smaller practices and ASCs often choose to sell or merge to stay financially viable. The number of physician practices owned by hospitals, health systems and other corporate entities in 2024 jumped 46% from 2012, according to Physician Advocacy Institute data.
8. Many leaders worry that continued consolidation will lead to facility closures.
"I think consolidation will continue to lead to more facilities being shuttered over time, especially in markets where there’s too much overlap," Benjamin Stein, MD, an independent orthopedic surgeon who co-founded and is now chairman of ASC development group Capital Surgical Solutions, told Becker's. "When you have too many facilities in a specific geography, it becomes hard for any of them to function well, and some will inevitably close."
9. This consolidation also could have considerable effects on the physician workforce, as increased consolidation often diminishes physician autonomy. A survey from NORC at the University of Chicago found that 61% of employed physicians report limited autonomy in making referrals outside their system, and 47% adjust treatment options to align with cost-reduction incentives.
10. Independent practices are seeking alternative models to access economies of scale while preserving clinical autonomy. About 80% of physicians said the ability to negotiate higher payment rates with insurance companies influenced their decision to sell their practice, as well as the need to efficiently handle regulatory and administrative requirements from payers, according to a 2023 report from the American Medical Association.