Hospitals and health plans have continued a slew of mergers and acquisitions, underscoring industry leaders' belief that underlying economic and policy trends will remain even if the Affordable Care Act falls.
According to the Wall Street Journal, increased M&A activity this year reflects strategies linked to the federal health reform law. Specifically, they reflect efforts to decrease costs and link reimbursements to quality and efficiency.
But even though the ACA could be struck down on Thursday, when the Supreme Court is expected to rule on its constitutionality, hospital leaders are continuing to work on deals to merge with or acquire hospitals.
"There needs to be some consolidation, there needs to be efficiency, there needs to be economics of scale… long-term, it's not going to change at all no matter what the Supreme Court says," says Boston-based Steward Health Care System CEO Ralph de la Torre.
Hospitals are also pursuing vertical integration deals with physicians and insurers. For example, Aetna and Falls Church-based Inova Health System recently partnered to form a joint health plan. "We believe the deal makes sense regardless of what happens" with ACA, says Charles Kennedy, CEO of Aetna's Accountable Care Solutions branch.
Nonetheless, investors and executives say the M&A pace may slow if the Supreme Court strikes down all or part of the health law. They note that health companies that sell products and approaches closely aligned to the ACA's provisions, such as tools to set up health insurance exchanges, may struggle to find new partners (Wilde Mathews, Wall Street Journal, 6/26).
