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Statesville Record & Landmark
A merger still in the works that would make Davis and Lake Norman Regional Medical centers part of a 206-member chain is likely to provide long-term stability to the for-profit hospitals.
It was announced at the end of July that Tennessee-based Community Health Systems (CHS), which owns 135 hospitals in 29 states, was planning to purchase Health Management Associates (HMA), owner of 71 hospitals — including Davis and Lake Norman Regional.
The deal is expected to close at the end of 2014’s first quarter pending 70 percent approval by HMA shareholders.
Don Dalton, vice president of public relations for the North Carolina Hospital Association, a nonprofit organization serving hospitals in the state, said joining forces “brings an economy of scale and hopefully access to capital that a smaller entity might not be able to get on its own.”
“When you look at the current healthcare environment, there is tremendous uncertainty … and because of that uncertainty, a lot of hospitals and systems are looking to be part of something bigger,” said Dalton.
Dalton said mergers typically come with greater security and expertise, along with the increased amount of capital available. He said the Affordable Care Act is cutting hospital payments for treating Medicare patients dramatically, and because most hospitals get at least half their business from Medicare, it will be important for hospitals to look for the safest way forward.
On a similar point, Medicaid patients account for about 15 percent of hospital business in North Carolina, and since the General Assembly has decided not to expand coverage for low-income people, there is the possibility of many people choosing to pay a penalty and go without insurance rather than buy their own policy.
An increase in uninsured patients would add more stress to hospital finances. Marcus Conley, chief financial officer for Davis Regional, said that once all the healthcare reforms fall into place that “it’s going to be hard for a standalone facility to survive.”
“Networking is going to be the answer to survival in healthcare,” said Conley.
According to healthcare research group Irving Levin Associates, hospital mergers have been on the rise in recent years. There were 50 hospital mergers and acquisitions in 2009, 76 in 2010, 93 in 2011 and 105 in 2012.
“Mergers tend to be an expression of the hospital leadership’s determination to keep services available within the community at whatever level is possible,” Dalton said.