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Becker’ s Hospital Review
Written by Helen Adamopoulos
The summer of 2013 was an eventful season for the for-profit hospital market. First, Dallas-based Tenet Healthcare Corp. agreed to buy Nashville, Tenn.-based Vanguard Health Systems in June in a transaction valued at $4.3 billion. Less than two months later, Franklin-Tenn.-based Community Health Systems gave the industry another mega-merger announcement when it revealed its planned acquisition of Naples, Fla.-based Health Management Associates in a deal valued at $7.6 billion.
News of the mammoth mergers has spurred concern about potential price hikes for consumers as a few powerful players take over more and more of the hospital market. In July, Moody’s Investors Service released a report declaring the Tenet-Vanguard deal bad news for nonprofit hospitals, particularly small standalone ones. The merger will strengthen Tenet’s market power, possibly driving further consolidation, according to Moody’s.
That could be even more bad news for payers. A study last year from the Robert Wood Johnson Foundation found last year that hospitals merging in already consolidated markets can send prices soaring by more than 20 percent.
For A Rebuttal to an earlier Robert Wood Johnson Foundation Study on the same subject with comparable results, see: