Concerned about hospital closures and increased patient burdens, state lawmakers are increasingly at odds with hospitals over potential medical mergers, in some cases derailing deals they don't think are in the public interest.
Financially strapped hospitals often consider merging with or acquiring other systems. After a pandemic-era downturn, healthcare mergers and acquisitions have steadily increased over the past two years. But some proposed hospital deals in states such as Connecticut, Louisiana and Minnesota have stalled after fierce opposition from lawmakers, labor and grassroots organizations.
At least 10 health care “megadeals” were canceled or terminated last year alone, in part due to increased scrutiny, according to a report in industry journal Becker's Hospital Review.
“We've seen across the country situations where a lot of promises were made in certain health care deals, and when you look at them, clinics are closing, prices are going up,” said Minnesota Attorney General Keith Ellison (D). “Access is decreasing.” state line.
When Ellison learned that Minnesota-based Fairview Health Services intended to merge with Sanford Health, a larger health system based in South Dakota, he faced re-election in late 2022. He was in the middle of an election campaign.
The proposed agreement drew sharp criticism from Minnesota Democratic lawmakers, nurses unions, University of Minnesota leaders, and community groups. Fairview owns the University of Minnesota Medical Center, which is funded by state taxpayers. If the system were to be integrated, Minnesota tax dollars could be spent across state lines. Some lawmakers also argued that the resulting system could create local medical monopolies, leading to fewer services and higher costs for patients.
Across the country, we've seen situations where a lot of promises were made in a particular healthcare deal, only to find that clinics are closing, prices are rising, and access is decreasing.
– Minnesota Democratic Attorney General Keith Ellison
As the Fairview-Sanford agreement progressed, Ellison's office held public hearings across the state. And while Fairview and Sanford officials said the merger would allow the systems to expand care, and some residents expressed support for the deal, the overall sentiment among stakeholders was negative. Ellison recalled.
Meanwhile, Democratic lawmakers passed a bill in May 2023 that would ban anticompetitive health care mergers and increase state oversight of potential deals. It was signed into law that same month.
Two months later, Sanford Health called off the merger due to a lack of support from “special interests in Minnesota.”
Hospitals with financial difficulties
In March 2023, Massachusetts-based Covenant Health scrapped plans to buy a small, struggling health system in a corner of northeastern Connecticut. More than a quarter of healthcare deals announced in the U.S. last year involved partners in financial distress, according to consulting firm Kaufman Hall.
Community groups voiced opposition to the deal, concerned that Covenant's acquisition would lead to cuts in reproductive health and other services. Covenant is a Catholic system that follows a set of rules called the Ethical and Religious Directive for Catholic Health Services, which prohibits the provision of some types of health care through this system. These include emergency contraception, fertility services, gender-affirming care, abortion, and some end-of-life care.
“The root of my concern was the fact that it was a Catholic medical institution following Catholic directives,” Connecticut Representative Gillian Gilchrest, a Democrat, told Stateline. “Health care options are already limited in that area of the state, and one of his family planning clinics in the area recently closed.
“There was concern that women in the northeastern corner of Connecticut would not have access to reproductive health care.”
Some area residents feared they would lose the hospital if Covenant didn't buy it, while others formed a coalition to urge the state to reject the deal. Gilchrest, along with 15 other Democratic state legislators, signed a letter opposing the deal.
It went bankrupt a few months later.
“The partnership is no longer financially viable,” Covenant President and CEO Steve Grubbs said in a statement announcing the termination.
Day Kimball Healthcare CEO R. Kyle Kramer said in a statement shortly after the announcement that the system's management was “disappointed” by Covenant's decision not to acquire the company. I did,” he said.
“We are immediately pursuing the best path forward for Day Kimball, working with local and state officials to maintain essential hospital services in our northeastern Connecticut community, and working with future “We look forward to exploring discussions with potential partners,” Kramer's statement said.
Gilchrest said he hopes Connecticut lawmakers will do more to protect services that will be eliminated as some hospitals merge, especially women's health services.
“Unfortunately, I feel like we’re not quite there yet,” she told Stateline. “As a result of many of these mergers, services such as labor and delivery departments continue to close across Connecticut when it comes to women's reproductive health care.”
Further backlash
In Louisiana, a plan to sell the nonprofit organization Blue Cross and Blue Shield of Louisiana to for-profit insurance giant Elevance Health for $2.5 billion was scrapped earlier this year after opposition from the state Legislature and community groups. Blue Cross had defended the proposed sale, arguing that the nonprofit insurer would help curb rising health care costs and become more competitive with domestic rivals.
Last month, Louisiana state senators called on “problematic issues” such as the fairness of the deal, Blue Cross' alleged efforts to influence policyholders' votes, and Elevance's fines, penalties, lawsuits and premiums. ” sent a report to the state insurance commissioner outlining the past. will increase. The Louisiana Hospital Association, other medical groups and the state treasurer also opposed the deal.
Louisiana Sen. Jeremy Stein, a Republican, said he plans to introduce a bill this Congress that would prevent deals like the proposed Blue Cross sale from taking effect unless they meet certain consumer protection standards. .
“The proposed sale of Blue Cross Blue Shield to Elevance Health raises concerns about the potential impact on Louisiana's health care landscape,” Stein said in a statement to Stateline.
“By putting these safeguards in place, we aim to prevent undue influence, personal gain and hasty decision-making that could harm the health and well-being of our communities.”
Back in Minnesota, the attorney general's office has reviewed nearly a dozen proposed health care deals in the less than a year since the new law was passed.
“We were not given advance notice before this law was passed.” [of a merger or other transaction] Unless the parties tell us,” said Elizabeth Odette, manager of the antitrust division of the Minnesota AG’s office.
“In some cases, that meant there wasn’t much that the parties could meaningfully do before closing the deal.”
But stronger legislation would allow “not just our offices, but also the public and [involved] “Both parties should take more time to consider the implications of the proposed mega-merger,” she said.
Stateline is part of States Newsroom, a nonprofit news network supported by a coalition of grants and donors as a 501c(3) public charity. Stateline maintains editorial independence. If you have any questions, please contact Editor Scott S. Greenberger. [email protected]. Follow Stateline on Facebook twitter.
