Becker's Hospital Review

91 FINANCE CMO / CARE DELIVERY Why hospital mergers may harm care quality By Megan Knowles M arkets for hospitals and physicians have become more concentrated in the last few years, and this consoli- dation may lead to worse care quality, accord- ing to a report in e New York Times. Six insights from the report, written by Aus- tin Frakt, PhD, director of the partnered evi- dence-based policy resource center at the VA Boston Healthcare System: 1. Although some healthcare leaders have claimed hospital mergers can improve med- ical care, studies have found mortality rates and health setbacks increase when market competition decreases. 2. Martin Gaynor, PhD, an economics pro- fessor at Pittsburgh-based Carnegie Mellon University, has authored several reviews ex- ploring the consequences of hospital con- solidation. "Evidence from three decades of hospital mergers does not support the claim that consolidation improves quality," he said. 3. is is especially true when the govern- ment constrains prices, as is the case for U.S. Medicare. "When prices are set by the gov- ernment, hospitals don't compete on price; they compete on quality," Dr. Gaynor said. However, this practice does not take place in highly consolidated markets. 4. For example, in 2006, the National Health Service in the U.K. started a policy that in- creased competition among hospitals. Dr. Gaynor authored a study showing that this policy led to shorter hospital stays and lower mortality rates. For every decrease of 10 percentage points in hospital market concentration, 30-day mor- tality for heart attacks dropped nearly 3 per- cent, the study found. Additionally, several studies of Medicare found hospital competi- tion leads to lower mortality rates from heart attacks and pneumonia. 5. In another study, investigators from the FTC looked at what happens when cardiol- ogists team up into bigger groups. e study examined the health outcomes of about 2 million Medicare beneficiaries treated for hy- pertension, a cardiac ailment or a heart attack between 2005 and 2012. e researchers found the patients were more likely to have heart attacks, visit the emergen- cy department, be readmitted to the hospital or die when cardiology markets are more concentrated. 6. "What the research shows, though, is that there are lots of ways markets can function, with more or less government involvement," Dr. Frakt wrote. "Even when the government is highly involved, as is the case with the British National Health Service or American Medicare, competition is a valuable tool that can drive healthcare toward greater value." n Kaiser Permanente waives tuition for first 5 medical school classes By Alyssa Rege O akland, Calif.-based Kaiser Permanente announced its intent Feb. 19 to waive all four years of tuition for the first five classes of students admitted to its new medical school. Kaiser officials said in a news release obtained by Becker's Hospital Review that its medical school has received pre- liminary accreditation from the Liaison Committee on Med- ical Education and will begin accepting applications from prospective students in June 2019 for its inaugural class in summer 2020. Each class will contain roughly 48 students, according to The New York Times. Mark Schuster, MD, PhD, founding dean and CEO of the Pasadena, Calif.-based Kaiser Permanente School of Medi- cine, told The New York Times that while the institution only plans to cover the entire $55,000-per-year tuition for all of its first five classes of students, Kaiser will offer "very gener- ous financial aid" based on need for future students. Kaiser is the second institution to announce that it will waive tuition for students. Last August, the New York City- based NYU School of Medicine declared plans to cover its entire tuition costs for all students, which equates to more than 400 students across classes. While NYU raised $600 million from donors to pay for its tuition plan, Kaiser is using a portion of its revenue set aside for "community benefits," which all nonprofit hos- pitals have to provide to maintain their tax-exempt status, according to The New York Times. The health system, which has an operating revenue of nearly $73 billion, spent $2.3 billion on community benefits in 2017, including charity care for the uninsured and community health spending. The medical school will be one of the only medical schools in the U.S. to be affiliated with a hospital or health system, not a university, The New York Times reported. Its curriculum will include a focus on small-group, case-based learning, and stu- dents will travel to the health system's hospitals and clinics in the greater Los Angeles area for their clinical education. "We've had the opportunity to build a medical school from the ground up and have drawn from evidence-based ed- ucational approaches to develop a state-of-the-art school on the forefront of medical education, committed to pre- paring students to provide outstanding patient care in our nation's complex and evolving healthcare system," Dr. Schuster said in a news release. In December, Kaiser added 11 executives to the medical school's leadership team. n

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