Hospital Consolidation: Can It Work This Time?

One of the consequences of the Affordable Care Act (ACA) is that it has sparked a giant wave of hospital consolidation: 100 deals were completed in the sector in 2014 — up 14% from the previous year, according to Wall Street research firm Irving Levin Associates.

What’s particularly notable about the recent spate of M&A is that it’s both “horizontal” and “vertical,” meaning hospitals aren’t just buying other hospitals, they’re picking up physician practices, rehabilitation facilities and other ancillary health care providers. Consider New York’s North Shore-LIJ, for example. Its aggressive M&A plan has turned it into the state’s largest employer, encompassing 18 hospitals, plus rehab centers, a medical research center, home-care services and hospice facilities. And last year it began offering health coverage through its own insurance company, CareConnect.

Wharton’s health care experts predict the trend of hospital consolidation will continue at a fast clip, particularly as health systems set up more and more Accountable Care Organizations (ACOs) in response to the ACA.

Full details: http://knowledge.wharton.upenn.edu/article/hospital-consolidation-can-it-work-this-time/

Medicaid Primary Care Parity

From Health Affairs:

For 2013 and 2014, the federal government raised payment rates to Medicaid primary care providers. Only some states plan to extend the rate increase.

Section 1202 of the Affordable Care Act (ACA) required states to raise
Medicaid primary care payment rates to Medicare levels in 2013 and 2014,
with the federal government paying 100 percent of the increase. This
provision–often referred to as “Medicaid primary care parity” or the
“Medicaid primary care fee bump”–was intended to encourage primary care
physicians to participate in Medicaid, particularly in the face of an
expected increase in enrollment as a result of the ACA’s expansion of
the program.

Federal lawmakers failed to reauthorize the fee bump during the 113th
Congress, ending in December 2014. As a result, states must decide
whether to revert to previous primary care payment levels or continue
at a higher level but without the benefit of the enhanced federal match.
Full details:
http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=137