Legislators warn of possible consumer harm if Beaumont board approves merger
Three Oakland County legislators are warning of negative patient effects if the board of eight-hospital Beaumont Health gives final approval to a proposed merger with Advocate Aurora Health, a 26-hospital system with corporate headquarters in Illinois and Wisconsin.
“As our community’s representatives in Washington and Lansing, we believe it is our responsibility to speak out when our constituents’ ability to access affordable, quality care might be in jeopardy,” according to a statement from U.S. Rep. Andy Levin, D-Bloomfield Township, who represents Royal Oak, state Sen. Mallory McMorrow, D-Royal Oak, and state Rep. Jim Ellison, D-Royal Oak.
“During a global pandemic that has acutely impacted our region and claimed more than 7,000 Michigan lives, we call on the leadership of Beaumont to do what it is in the best interest of patients, not earnings, address the issues raised by medical staff concerning their ability to offer excellent care – and promptly reevaluate this proposed merge,” the statement said.
Levin’s office told Crain’s the congressman had a phone conversation with Beaumont CEO John Fox Tuesday morning.
In a statement, Beaumont said: “We appreciate the opportunity to have continued conversations with lawmakers about Beaumont’s future. There is no immediate action planned now regarding a potential partnership with Advocate Aurora Health.
“Beaumont Health is also very proud of how our quality metrics and supporting data have improved overall after the (2014) merger of Beaumont Health System, Oakwood Healthcare and Botsford Heath Care. Before proceeding with any partnership with any party, we would ensure the transaction would demonstrably help us improve Beaumont’s quality, lower costs and provide jobs, growth and investment opportunities here in Michigan.”
But Levin and Ellison said they continue to oppose the proposed merger as Beaumont has not provided anything new that gives them confidence patients would benefit. McMorrow said she still has concerns.
“I am always open to discussion,” Levin said. “To date, Beaumont has not provided any information to suggest that the merger would be beneficial for the people of the ninth district and southeast Michigan. Unless we receive clear and convincing information to the contrary, I oppose the merger.”
In late June, the boards of Beaumont and Advocate Aurora signed a letter-of-intent to explore a full merger. The health systems said they hoped to finalize plans later this year, but last month the Beaumont board placed a pause on merger talks after doctors, nurses, employees and donors have come out in opposition, Crain’s has reported.
Michigan Attorney General Dana Nessel said she would carefully review final plans for a merger. Beaumont has notified Nessel of the proposal, but Nessel said she has little power to do anything until a merger is approved.
“As an overwhelming number of Beaumont hospital staff and donors sound the alarm on this proposed merger, we must also step forward to express our growing concern on behalf of our constituents who rely on Beaumont Health and could experience higher health care costs without improving—and, according to some studies, even worsening—patient outcomes following this merger,” the legislators’ statement said.
“Evidence suggests that consolidation—and the corresponding diminution of competition—has allowed hospitals to demand higher payment rates in their negotiations with commercial insurers.”
The vast majority of studies on hospital mergers over the past 30 years have shown little consumer benefit to hospital consolidation. Most hospitals cut expenses the first two or three years of mergers, but raise prices on patients and health insurers because of their newly gained market power. Over time, per patient expense creeps back up to pre-merger levels.
A study by the National Academy for State Health Policy shows that hospital mergers results in 20 percent to 40 percent higher prices with the largest price spikes occurring in concentrated markets, which would include Detroit.
The report also found that mergers of hospitals in different markets or states also end up with 6 percent to 9 percent price spike.
Another study published by the New England Journal of Medicine earlier this year found that “hospital acquisition by another hospital or hospital system was associated with modestly worse patient experiences and no significant changes in readmission or mortality rates.”