Indiana Weighs Hospital Monopoly as Officials Elsewhere Scrutinize Similar Deals – KFF Health News

Terre Haute, Indiana – Locals in this city of 58,000 have to wait at railway crossing There is not enough room for any one of the dozens of freight trains that pass each day.

But a proposed merger between two hospitals on either side of town could pose a problem. exacerbating the problem If hospitals close certain services at a location, such as trauma care, in an emergency Proposal has been cited as a possibility. Tom High, the fire chief of a nearby township, said some first responders would be forced to transport critical patients away, risking more delays, if they were “railroaded” by a passing train, as locals called it.

Indiana officials are considering whether to allow Union Hospital, which is licensed as a 341-bed facility, to buy the county’s only other acute care hospital, the 278-bed Terre Haute Regional Hospital. There are also concerns about lost tax revenue, deterioration in care and higher prices in the proposed deal.

Over the next few months, the Indiana Department of Health must find “clear evidence” that the proposed merger will improve health outcomes, access and quality of care. Those benefits must “outweigh any potential harms.”

As the nation’s healthcare industry has become more concentrated amid a steady clip of mergers in recent decades, it’s common for one large system to dominate the market. In this case, the deal would be Indiana’s first merger under the COPA law, short for Certificate of Public Advantage, which the state enacted in 2021. Such laws allow deals that the Federal Trade Commission would otherwise consider illegal because they reduce competition and often create monopolies. To minimize the negative effects of monopolies, merged hospitals typically agree to conditions imposed by state regulators.

Union Hospital leaders said it was time to move “beyond competition” in the interest of the region, which has struggled to retain jobs and raise life expectancy rates. Hospital spokesman Neil Garrison said the merger would ultimately improve care, expand access and cut costs. Leaders of the regional hospital, which is owned by the for-profit chain HCA Healthcare, did not respond to questions about the proposal.

There is, however, an unusual implication: If the merger is approved, the surrounding county would lose tax revenue from one of its biggest businesses. Union Hospital, a nonprofit exempt from paying taxes, would take over tax-paying Terre Haute Regional, which paid about $508,000 in county taxes for 2023, Vigo County Auditor Jim Bramble said. That’s equal to the starting salary of about nine sheriff’s deputies, according to the county. $83 million Budget 2024.

Garrison said the hospital system is aware of the tax implications for the county and is “looking into opportunities” to address it.

Indiana regulators are considering whether to allow rival hospitals in Terre Haute to merge. The deal would be Indiana’s first merger under the COPA law, short for Certificate of Public Advantage, which the state enacted in 2021. (Samantha Liss/KFF Health News)

Meanwhile, Roland Kohr, a pathologist at Regional and a former county coroner, worries about eliminating competition, forcing hospitals to expand their services or compete against each other. “The effort to introduce new technologies, to hire more physicians, may not happen,” he said.

The FTC has urged states to avoid COPA. Pointing to research Which found that they led to “significant increases in prices and declines in the quality of care.” Similar mergers have resulted in federal bans in North Carolina and opposition from locals and legislators in Tennessee.

“A merged hospital system, which faces little competition after the merger, usually has little incentive to fulfill its promises, because patients have no other options,” wrote the authors. Chris GarmanEconomists at the University of Missouri-Kansas City who have studied the COPA merger have warned Indiana health officials about the proposed merger.

Indiana already has Highest hospital charges in the countryThat’s according to a study by the Rand Corp. research organization. The Indiana Legislature tried this last year. price reinGloria Sachdev, CEO of the Indianapolis-based company Indiana Employer Forumwhich has pushed for pricing caps on behalf of frustrated business leaders, worried that union-sector mergers would eliminate these benefits and push prices higher.

Indiana’s COPA limits the amount of fee increases hospitals can make, Garrison said.

Terre Haute's youngest mayor, Brandon Sakbun, sits at a desk in front of a laptop and computer screen. He's wearing a navy suit and a light blue shirt.
Brandon Sakbun was elected last year as Terre Haute’s youngest mayor. He believes a merger between the adjoining county’s only two acute care hospitals will benefit residents by changing the area’s “poor” public health statistics. (Samantha Liss/KFF Health News)

On the other hand, Ballad Health, the largest COPA-created hospital system in the country, reports that the amount of time patients spend in the emergency room In Virginia and Tennessee, the time spent in hospital before being admitted has more than tripled, reaching about 11 hours in the six years since the 20-hospital monopoly took hold. Still, the time spent in hospital before being admitted has increased in Tennessee. The highest marks were awarded to the ballad Even when certain quality metrics, including its ER speed, fall below established benchmarks.

Ballad Health spokeswoman Molly Lutton said the system’s performance has improved since these data were collected.

Last year, some people in Tennessee unsuccessfully tried to urged the county board called on the state to better regulate the hospital system. This spring, state legislators refused to hear testimony from residents who made the five-hour trip to Nashville to testify. A bill that sought to limit future COPA mergers in the state – which ultimately did not reach a full vote.

Problems have also arisen when COPA – and its oversight – has been removed, leaving the merged hospital system “Unregulated monopolyAfter North Carolina repealed its COPA in 2015, a subsidiary of HCA Healthcare purchased Mission Health, the COPA-created monopoly in Asheville, for $1.5 billion in 2019. The monopoly in Asheville remained but none of COPA’s terms applied to the new owner.

State inspectors last year found “deficiencies” at Mission Health that led to the deaths of four patients and posed an “immediate threat” to the health and safety of patients, according to a 384-page report. Federal oversight Report. North Carolina Attorney General Joshua Stein Sued HCA subsidiary Last year, allegations were filed that the ER had “significantly deteriorated,” and the company failed to maintain some critical services, including oncology care, in violation of the purchase agreement with Stein’s office because the company had acquired a nonprofit organization.

HCA said it promptly addressed the issues and denied Stein’s allegations in a legal response to the ongoing lawsuit, arguing it had expanded services since its purchase. HCA also argued the agreement said nothing about maintaining quality of care.

Sunset view of the Vigo County Courthouse in Terra Haute. It is an ornate building with a clock tower.
If Indiana regulators approve a merger between rival hospitals in Terre Haute, the surrounding county would lose tax revenue when nonprofit Union Hospital, which is tax-exempt, acquires Terre Haute Regional, a for-profit hospital owned by Nashville-based HCA Healthcare. (Samantha Liss/KFF Health News)

In Indiana, Union Hospital laid the groundwork for its merger more than three years ago when its leaders provided the language for it. COPA Laws to the then-State Senator John FordAccording to legislative testimony by Taylor Hollenbeck, a Republican from Terre Haute, a consultant to RJL Solutions on the merger, he believes he “would be the best advocate for this proposal.” Ford, who is listed as a co-author of the bill on the legislature’s site, did not respond to requests for comment.

Union CEO Steve Holman testified at the bill’s hearing that the county’s public health rankings — along with average Life expectancy ranking 68th out of 92 counties There must be a “call to action” in the state – to do something “big and bold”.

Terre Haute Mayor Brandon Sakbun agrees that the merger could help the county’s “poor” public health statistics. Last year, he was elected the city’s youngest mayor at age 27 on a promise to “transform Terre Haute.” Region’s workforce There has been a steady decline And local leaders have pinned their hopes on a new casino and a manufacturer of battery parts for electric vehicles to reverse the trend.

Sakbun’s father is an OB-GYN at Union, but the mayor said that doesn’t affect his opinion and he supports the hospital merger despite the loss of tax base. He believes it will help recruit medical and other professionals to an area that has struggled to attract top talent.

“Do I believe this is contrary to research?” Sakabun said. “I really do believe so.”

KFH Health News correspondent Brett Kelman contributed to this article.

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