by Bob McEwen
Ohio’s healthcare landscape is coming into some very bumpy challenges in the days ahead.
The complications of the affordability crisis in our state are well known. Any family in Ohio that had to buy a prescription drug recently or that has private health insurance can tell you that maintaining affordable healthcare is getting harder and harder. But there is still another looming crisis that could raise more barriers to healthcare for millions.
The safety net and rural hospitals that so many Ohioans rely upon for their basic medical services are being hit by rising costs that make it difficult to survive. Nearly a third of rural hospitals in the state are barely breaking even, maintaining razor-thin operating margins of less than 1 percent and providing little room for financial error. In fact, 81 of Ohio’s 88 counties already are designated with at least one primary care shortage. If these vital medical institutions are to continue providing essential services, action must be taken now.
Public funding for hospitals continues to decline. Incorporating solutions which harness marketplace forces and do not constantly depend upon the taxpayer is logical and important. Consolidation of certain hospitals is one practical solution. The objective is for Ohio to fortify its healthcare system in several ways. Select consolidation can strengthen financial stability, optimize resources, and improve quality care throughout the state.
Unpredictable reimbursement models added to accelerating costs have several Ohio hospitals facing very difficult decisions. Five years ago, before COVID and the massive influx of migrants across our borders, hospitals bore the burden of more than $40 billion in uncompensated care. Reports show that today nearly 1/3 of rural hospitals are in danger of closing, nationwide. Experts believe that some consolidation can provide a lifeline for these struggling institutions by enabling them to pool resources, reduce duplicative services, and achieve economies of scale, contributing to financial stability.
Consolidation can also lead to improved healthcare by promoting collaboration among professionals. Consolidated hospitals can centralize resources, streamline operations, and implement standardized best practices. This synergy also eases creation of specialized centers of excellence: the hallmark of American healthcare. Patients in rural and underserved areas will have access to more specialists and advanced treatments reducing the need for costly and burdensome transfers to urban hospitals.
Unfortunately, the Biden Administration has chosen to throw a specific impediment to necessary consolidations in the healthcare industry. A 2021 Executive Order on “Promoting Competition in the American Economy” has encouraged the Federal Trade Commission (FTC) under Chairwoman Lina Khan to be particularly aggressive in rejecting consolidation efforts. During her first year as Chair alone, the FTC blocked four hospital mergers and also made changes to its guidelines that Republican commissioners believe “threatens to chill legitimate merger activity and undermine attempts to rebuild our economy in the wake of the pandemic.”
Many expert practitioners believe that much of the FTC guidance surrounding “healthcare competition” is flawed. Not only is it based on an outdated model of healthcare, but it fails to acknowledge the realities of today. Recent research at Maryland’s Agency for Healthcare Research and Quality and IBM Watson Health found that mortality rates at consolidated rural hospitals decreased from 9.4 percent to 5.0 percent, and a series of studies conducted by Charles River Associates has found statistically significant reductions in operating revenues and costs after consolidations.
A pathway exists for Ohio to support robust and sustainable healthcare infrastructure, but Washington must move out of the way. It is vital that policymakers, healthcare providers, and communities work together to ensure that consolidation efforts are implemented thoughtfully and in line with the dynamics of the marketplace, not only to support struggling rural and safety net hospitals but to also build a brighter healthcare future for all residents of the Buckeye State.
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Bob McEwen represented Ohio’s 6th Congressional district in the U.S. House of Representatives for six terms.
