Some of the Hudson Valley region’s largest physician groups recently partnered with regional and national companies amid concern from federal regulators that health care mergers increase costs of care for patients.
CareMount Medical, which is part of a group of over 2,100 providers serving more than 1.6 million patients throughout the Hudson Valley and New York City, recently finalized its move to join Optum, one of the largest owners of provider groups in the country, with 53,000 physicians nationally.
And earlier this year, Westmed Medical Group, which has nearly 500 physicians and 1,500 clinical employees at sites across Westchester County in New York and Connecticut, joined Summit Health, a medical network with more than 12,000 workers across five states.
Meanwhile, authorities have moved to block other mergers involving some hospitals in other states as well as several large health companies, including Optum, claiming the deals violated antitrust laws and threatened to raise prices for patients.
How Hudson Valley health care mergers evolved
Amid the debate, many mergers in the Hudson Valley over the past decade have avoided those cost increases because enough providers still exist to fuel heated competition over patients, said Wendy Darwell, president and CEO of the Suburban Hospital Alliance.
“It’s really been driven by the necessity to achieve some cost savings through economies of scale, and to be able to deploy resources more efficiently,” Darwell said, addressing the wave of New York City area health systems taking over hospitals and providers in the Hudson Valley since 2010.
Another key factor of mergers, Darwell added, is to allow providers to jointly negotiate reimbursement rates with health insurance companies, which helps limit price increases for patients.
In other words, Darwell said: “Being bigger gives you a better advantage when it comes to operating efficiently, improving quality, and negotiating well.”
The region’s competitive market, however, has prompted other health system spending on hospital construction and cutting-edge medical technology that impacts the cost of care, potentially driving up prices for patients.
Further, clashes between large health systems and health insurance companies have resulted in disruptions to patients’ in-network access to doctors, which can force them to find new doctors or pay higher out-of-pocket costs for care.
Much of the health care consolidation and spending traced back to policy reforms and consolidation incentives under the Affordable Care Act in 2010. Some experts, however, have voiced concerns recently that the extent of mergers has led to health care cost increases industry wide.
The amount patients pay for health care have also increased in recent years as many health insurers raised deductibles, premiums and other costs, citing everything from rising drug prices to COVID-19 pandemic-related costs and inflation.
Why authorities seek to block health care mergers
Now, the Biden Administration and the Federal Trade Commission, or FTC, have ramped up attempts to prevent some health care mergersparticularly in markets with limited competition or cases of corporations taking too much control of key services, such as health technology providers.
One federal lawsuit aims to stop Optum and its health insurance affiliate, UnitedHealth Group, from acquiring Change Healthcare, asserting the deals would stifle competition. New York Attorney General Letitia James’ office is involved in the case.
“It’s concerning that amidst a devastating pandemic United is pursuing actions that would drive up healthcare costs and reduce the quality of services for New Yorkers and patients nationwide,” James said in a statement on the lawsuit.
Optum disputed the lawsuit’s claims as being without merit, asserting instead that the merger “will benefit the entire health system by increasing efficiency and reducing friction, resulting in lower costs and a better experience for patients, payers and providers.”
Dr. Scott Hayworth, CEO for Optum Tri-State region, detailed CareMount’s renaming as Optum in a recent email to its patients but emphasized it will remain locally led.
Patients will also “continue to receive the high-quality care and experience (they) know and trust, with a greater regional footprint and more access,” added Hayworth, who previously led CareMount and its predecessor Mount Kisco Medical Group.
The CareMount rebranding announcement included two other regional medical groups −ProHEALTH NY and Riverdale −that also joined Optum.
Meanwhile, two major health providers in New Jersey dropped plans in April for merger, ending a more than year-long legal battle with the FTC. That case joined other high-profile FTC challenges to health care mergers in recent years, as the industry faced the reality of further opposition to consolidation.
Still, some health network’s attempts to keep expanding and consolidating in competitive markets such as New York City and the Hudson Valley have avoided similar pushback from the FTC, including New Jersey-based Summit Health’s partnership with Westmed.
“By leveraging Summit Health’s expertise in coordinated, value-based primary and specialty care, the newly bolstered organization will create a uniquely accessible comprehensive care delivery model and allow us to play a greater role in the health of our communities,” Anthony Viceroy, CEO of Westmed, said in a statement earlier this year on the partnership.