Contrast Creative experienced a merger first-hand this past spring. Our client, Alamance Regional Medical Center, was in the process of merging with Cone Health while we were in the process of creating Alamance Regional’s new TV campaign.
Mergers are nothing new—they have been happening for decades in the medical industry. But the rate of mergers and acquisitions is on the rise. A New York Times study from this past August shows that the number of deals in 2012 (105) was more than twice what it was in 2009 (50), and each of these deals can involve more than one hospital. One reason for the increased activity is the passage of The Affordable Care Act in 2010.
The legislation changes the formula for how some hospitals are paid from a fee-per-service model, where doctors are paid for each procedure, to a system where doctors are paid for each condition treated. The change puts increased revenue pressure on hospitals, which can make up some of their lost funds by consolidating costs of billing and other back-office activities. The new legislation also mandates the introduction of more efficient systems, such as electronic record keeping, which are expensive for standalone hospitals to implement.
So if consolidation creates new, positive efficiencies, why is there so much scrutiny in the media over the new wave of medical mergers?
As with acquisitions in any other industry, there are worries that with decreased competition in a market, prices will rise and some hospitals might be tempted and have the leverage to charge insurance companies more for services. These price increases would then be passed on to consumers via higher fees and premiums.
But healthcare networks say it’s not all about the money. They also point to merging as a way to increase patient access to expert medical knowledge and advanced technologies. In an official statement about the Alamance Regional merger, Cone Health CEO Tim Cook said,
“Our merger is a positive step for the future of both health systems. But more importantly, it is great news for people throughout this region who will, over time, have access to a broader range of high-quality, expert medical care.”
What this means practically for patients is that instead of only having access to the medical staff of one hospital, they will now benefit from the collective expertise of physicians at many different facilities.
For example, if a patient needs a complex heart procedure and the consolidated hospitals share access to a doctor from a great cardiovascular surgery program, then the patient benefits. The same idea applies if one facility in a shared network owns a medical technology that another facility would not normally be able to access; it can also be shared.
For patients in Alamance County, the merger with Cone Health brings continued healthcare growth and ongoing community support. As part of the merger, Cone Health will fund long-term capital plans, which include $150 million in projects. The merger also resulted in the establishment of a community health foundation called Impact Alamance—Funding a Healthy Community. With an endowment of $54 million, the foundation will provide more than $2 million annually in grants to fund projects designed to improve the health of the community.
The Foundation’s newly appointed Executive Director Tracey Grayzer said,
“The funding provided through Impact Alamance has the potential to be truly transformational for Alamance County.”
It appears mergers and consolidations are transforming the entire healthcare landscape nationwide, a trend that doesn’t appear to be slowing down anytime soon. And why would it? Through our work with Alamance Regional, we’re seeing that consolidation has the potential to improve care through increasing cooperation, streamlining costs, supporting community health programs and enhancing the overall brand.
Click here to view the award winning commercials that we created for Alamance Regional Medical Center in 2013 and strategically branded to Cone Health as being “My Hospital for Exceptional Care.”