PROVIDENCE — Two health care systems own 80 percent of the hospital beds in Rhode Island. They’ve endured similar financial pressures and duplicated some care. And now, they are looking to merge to become a single integrated health system with Brown University’s Warren Alpert Medical School.
The news was seen as a win for the three organizations, who look to serve Rhode Islanders from birth to end-of-life, with supporters saying a united local institution might be stronger in an industry marked by the uncertainty of the pandemic.
But what will this actually mean for patients? What are the costs? What are the potential benefits?
According to Robert Hackey, professor of health care policy at Providence College, “every Rhode Islander has a stake in this merger.”
Here are the answers to some of Rhode Island’s most pressing questions, from health policy academics and other experts.
Q: Will going from two systems to one seems like it would eliminate competition in a small market. Will this increase the cost of care or my insurance premiums?
Dr. Timothy J. Babineau, Lifespan’s chief executive, told a Globe reporter Tuesday that the state’s Office of the Health Insurance (OHIC) caps the reimbursement rate insurers pay to hospitals. Also, both he and Dr. James E. Fanale, Care New England’s chief executive, voluntarily committed to supporting the health cost trend initiative, which was launched by Governor Gina M. Raimondo, to hold the total annual health care spending increases to 3.2 percent for the “first several years” after the merger is approved, said Babineau.
Hackey at Providence College said an increase of 3.2 percent is relatively low — historically speaking. But while the cost of out-of-pocket expenses might not go up, the cost of insurance premiums likely will.
“It’s not like Blue Cross (Blue Shield) can just say, ‘No, we’re not cutting a contract with you,’ because this newly merged system is going to have so much market power,” said Hackey.
Martin Gaynor, an economics professor at Carnegie Mellon University and former director of the Bureau of Economics at the U.S. Federal Trade Commission, said there’s no data that supports the idea of mergers leading to lower costs.
“There have been scores of mergers over the past three decades, almost 1,600 over the past twenty years, so if hospital mergers were going to systematically reduce costs or improve quality, we would have seen it by now,” said Gaynor, who is one of the founders of the Health Care Cost Institute, a nonpartisan nonprofit dedicated to sharing information about the country’s health care spending.
Q: Will a merger improve the quality of care?
Hospital groups, including Care New England and Lifespan, often tout efficiency, quality increases, and cost controls to justify mergers and acquisitions. Elsa Pearson, a policy analyst with the Boston University School of Public Health, has heard the promises before.
“The same arguments are made over and over in favor of mergers,” said Pearson, who is originally from Richmond, Rhode Island. “The data shows that just doesn’t happen.”
Hackey said bigger isn’t always better, but managing volume is. For example, if one hospital is doing a lot of open-heart surgeries each year, the higher volume of procedures usually leads to better outcomes. But with two systems, Hackey said, “everyone is doing everything.” It would be better for patients if certain hospitals specialized in certain procedures instead of each trying to do it all.
“Could it be done? Absolutely,” said Hackey. “But asking a Rhode Islander to travel for any length of time to leave their local hospital to go to one in another city is going to be a tough sell.”
Q: What are some of the advantages of this type of merger?
If the merger is successful, a single, comprehensive network will be handling your care from cradle to grave in the state. This also means that all medical records will also be on one system instead of spread out among several. But because Care New England and Lifespan use two different record software systems, it will take “at least a year,” Hackey says, to transfer records and to train staff — from frontline providers to those in the billing department.
Q: What does the health care systems’ relationship with Brown University’s medical school mean?
According to Dr. Jack Elias, the dean of Brown’s Medical School, an integrated medical center with teaching hospitals will allow students to see population health management and an integrated clinical experience during their rotations. But Pearson points out another benefit to the relationship.
“If Rhode Island finally has an academic health care system, these big hospitals in Rhode Island will finally have at least a chance to compete with the big dogs in Boston,” she said.
Q: When could the merger be approved?
The definitive agreement, which has now been signed, will serve as the basis for filings with the Rhode Island Department of Health, the attorney general’s office, and the Federal Trade Commission. Babineau said Tuesday he hopes to submit these filings in the “next week or two.”
“After that, it’s a little bit variable as to how quickly each agency will review the application. We’re hoping (the application process) will be efficient. We’re going to be very sure to be as comprehensive in filing out the application as possible to not leave too many questions in their mind,” said Babineau.
However, Hackey said that because of how negatively some hospital mergers have played out in the U.S., the FTC has become more strict in the regulatory and review process. He said it might not be a “closed case” so quickly.
Babineau and Fanale said they don’t expect the regulatory process to be very long because they believe they have a strong, compelling case to merge. At the very most, Babineau said he expects the process to take “several months, maybe a year.”