The Benefits of Mergers

Dramatic changes in health care have prompted many hospitals to explore merger strategies as a means of remaining competitive in the future. But the Federal Trade Commission's aggressive prosecution of hospital mergers may thwart hospitals' efforts to adapt to these changes. The FTC's renewed zeal for challenging hospital mergers is impacting hospitals across the country. Hospital providers are facing a critical juncture in history. Several market forces are creating an urgent need for hospitals to make significant capital investments and achieve greater economies of scale. Despite hospitals' need to invest in EHRs and other technology, it is increasingly difficult for them to access capital to make those investments. Through a merger, hospitals can gain the economies of scale necessary to reduce costs and waste, eliminate duplicative services and technology, and spread costs over a larger base. These improvements allow hospitals to provide greater value to patients, which is critical in the new era of value-based purchasing.