Merger? Acquisition? Affiliation? Combination? It doesn’t matter so much what Dartmouth-Hitchcock Health and GraniteOne Health choose to call their recently announced intention to join forces. Of more interest is whether their proposal is driven by patient care or market share.
The CEOs of D-H health system, which includes its flagship academic medical center in Lebanon and a network of smaller hospitals, and Manchester-based GraniteOne, which includes Catholic Medical Center and two community hospitals, say their proposed “combination” would result in cost savings, increased access to capital for infrastructure investments, and improved access to care, and in particular to specialty services. (Not to mention fulfilling D-H’s long-cherished desire to increase its presence in populous southern New Hampshire.)
It will be a challenge for the two systems to demonstrate conclusively the potential benefits of this consolidation in terms of cost and quality of care. A number of studies have found no such link. For example, a recent New York Times analysis of hospital consolidation in 25 metropolitan areas from 2010 through 2013 found that in many cases, prices for consumers increased as competition waned, driving up health care costs. A 2016 article in Harvard Business Review concluded, based on years of research by one of its authors, that “provider consolidation typically raises prices, with no measurable impact” on quality of care.
So we wonder why the D-H and GraniteOne partnership would be an exception and what models they looked to in formulating their plans. In particular, are they willing to commit to lower costs, improved quality of patient care and increased access to services throughout their combined system, which would be vast by New Hampshire standards? (Their combined annual operating budgets total $2.6 billion.) Will patient outcomes improve while prices go down? Will there be shorter waiting times for appointments? Will patients continue to enjoy access to all the services they now utilize? Will pricing become transparent? What metrics will be established to measure how well the new system is performing in meeting these and other commitments?
Regrettably, consumers themselves typically have little meaningful voice in determining whether such combinations would benefit them. That role is assigned to state and federal regulators, and the proposed new venture — to be called Dartmouth-Hitchcock Health GraniteOne — must still pass muster with them.
But there is ample reason to question whether the state is in good position to scrutinize an affiliation of this size, scope and sophistication. The Legislature allowed the Certificate of Need process, which provided detailed oversight of mergers, affiliations and large construction projects involving hospitals and other health care facilities to lapse in 2016. In most cases, this leaves the Charitable Trusts Unit within the Attorney General’s Office as the sole evaluator of proposed mergers. That’s because the vast majority of New Hampshire hospitals are nonprofits, such as Dartmouth-Hitchcock Medical Center and Catholic Medical Center. And as the Concord Monitor reported last month, it’s far from clear that the Charitable Trusts Unit has the authority to access all the information it might need to ensure that patients, and the state as a whole, would benefit. Lucy Hodder, a University of New Hampshire law professor who specializes in health policy, told the Monitor that New Hampshire need look no further than Vermont and Massachusetts to find far more robust state oversight of health care mergers and acquisitions.
Or “combination,” as the two health systems prefer to call it. Ironically, there was a time in America — during the Progressive Era, from the late 1890s to the 1920s — when “combination” was a red flag for trust-busters. In fact, the Sherman Antitrust Act of 1890, still in force, outlaws “every contract, combination or conspiracy in restraint of trade.”
On the other hand, if D-H and GraniteOne can demonstrate that their proposed combination would unlock better and cheaper health care in New Hampshire, that would be a good outcome for patients and the state as a whole.