Do Hospital Mergers Really Save Money or Improve Outcomes?

At times over the years, people have misinterpreted why GBMC HealthCare has chosen to remain an independent health system rather than merge with a larger hospital company. To be clear, we are not independent for the sake of independence or due to any stubbornness or desire to have it our way. We strive to remain independent because it is truly best for our community, and it is in full alignment with our vision.

To help explain our reasoning, I would like to review key issues within our country’s healthcare industry and the need for transformation. Studies, such as this one performed by The Commonwealth Fund and reported on by CNN, have shown that the U.S. healthcare system is the most expensive in the world (without evidence of better care or outcomes). After researching this dilemma in depth, in 2007, the Institute for Healthcare Improvement (IHI) introduced its triple aim framework to address root causes.

This framework emphasizes improving the health of populations (better health), enhancing care quality and patient experience (better care), and reducing the per capita cost of healthcare (least waste). It reiterates a need to transform to see results. 

In late 2010, our Board of Directors went off on retreat. It was shortly after the passage of the Affordable Care Act, and they wanted to study the facts and decide what would be best for GBMC and the community it serves. They learned a few things. First, the U.S. has the best trained doctors, nurses, and other clinicians in the world, and they probably work harder than in other countries. They learned that the U.S. does extremely well with acute illness. As an example, look at our EMS system and our trauma care at places like Shock Trauma; we lead the world. If you have acute abdominal pain, as another example, you want to be in the U.S. But the Board also learned that for many chronic diseases, like diabetes or congestive heart failure, you are statistically better off in many other countries that have better designed systems for managing chronic disease. The Board also learned that we spend 40% more per capita on healthcare than all the other industrialized nations like France, Germany and the Netherlands and our outcomes are often not as good. The Board realized that we could not change the whole country, but they decided to improve what they did control. They wanted to build on our outstanding acute care hospital and create the ability to manage the health of a population, especially helping those who already suffered from chronic disease. They then wrote our four-paragraph vision statement that you can find here.  The vision statement contains my marching orders as CEO - to build a community based true “system” of care that covers people from birth to death.

At GBMC HealthCare, we have adopted IHI’s evidence-based triple aim approach with an added fourth aim of more joy for those providing the care. We are redesigning care and believe this quadruple aim is the definition of the care we want for our own loved ones. We are continuing to work towards providing it to every patient, every time.

There is no value in joining a larger hospital company unless what we are missing is hospital capacity. If we are trying to keep people out of the hospital, more hospital capacity just brings more cost. Also, becoming a part of a hospital company that is not committed to transforming towards the four aims, would create a clash of cultures, and slow down movement towards our vision. 

It is not universally true that when hospitals merge, economies of scale are created that lower costs for payers and patients. In fact, healthcare mergers are often designed to give hospitals more leverage with suppliers and insurance payors, which can result in the consumers (patients) seeing higher downstream costs. This concept of “hospital buyer power” is explored in many research papers including this one, published in 2021 in the RAND Journal of Economics. A 2020 study led by Harvard Medical School scientists that was published in the New England Journal of Medicine determined that mergers do not always result in improved patient care, experience, and outcomes, either. 

Many larger hospital companies do not share our vision and have continued to focus on building hospital-based services known to be reimbursed at higher rates and thus, drive more revenue. This will not improve the state of healthcare in our country.

At their core, hospitals are designed to serve three basic functions: to deliver babies, offer reparative surgery, and help patients when they are acutely ill. Hospitals are one vital component of the overall system of care, but they offer no mechanism for maintaining the health of the population. To influence change and generate better health outcomes with lower long-term cost, the industry overall must commit to advanced primary care, chronic disease management and prevention, and removal of barriers to accessing healthcare.

In Maryland, our unique payment and reimbursement model is intended to control costs and improve the quality of care by incentivizing more efficient, effective care rather than by simply selling individual services and hospitalizations. In theory, healthcare organizations that embrace system redesign and implement the triple aim framework should thrive under the Maryland Model. 

Therefore, if hospital leaders believe in the IHI triple aim and want the Maryland waiver to work, we must resist the status quo. We cannot simply identify areas of healthcare that reimburse well with a goal of filling up our hospitals. 

We must instead design true systems of care based on what our communities truly need, work to keep people OUT of the hospital by helping them manage chronic disease and be accessible when they are sick through advanced primary care and coordination. 

I am proud that GBMC HealthCare is devoted to this work and has built a system that is improved annually through our strategic plan. I am excited that we have taken additional steps such as aligning with community partners, especially those in Baltimore City, to assist with services like ride sharing, housing, and access to healthy food to work on the social determinants of health and support those we serve. By transforming the system, removing barriers, increasing access to care, and taking accountability for our patients, we are slowly but surely making a positive difference on the health of our community.