Our take: Who will benefit most from this partnership?

By Vidal Seegobin, Elizabeth Orr, and Marisa Nives

In this cycle of seemingly perpetual news headlines announcing mega-mergers and large corporate healthcare plays, there are two core questions that outside observers want answered.

1.       Is this a good deal?

2.       More importantly: What are the implications for me (if any)?

Let's take this recently announced joint venture between HFH and Ascension and try to answer both.

Is this a good deal?

To answer this question, it's worth unpacking some of the background and history surrounding this deal.

Our market scenario planner tool shows declining inpatient volume projections in the market impacted by this proposed deal, with a projected decline of 2.7% in five years and a projected decline of 2.1% in 10 years.

In recent years, the Federal Trade Commission's regulatory posture instigated an uptick in non-contiguous mergers by very large health systems whose market entry often instigates more mergers in the market.

Additionally, the merger between Spectrum Health and Beaumont Health, which created $13 billion Corewell Health, led to hospitals and health systems in Michigan feeling increased pressure to "bulk up" to able compete for declining volumes. This is also a fairly accurate depiction of what we're seeing across Midwest markets.

How does this impact specific actors?

When trying to determine if this transaction is a good deal for specific actors, broadly we'd say:

• Henry Ford Health: Good. The partnership is beneficial. The new entity will be branded as HFH and the venture will create a more competitive network of assets in Michigan.
• Ascension: Good. Their financial struggles have been well publicized. And as a large national player, it's intuitive that they'd have to take a financial and strategic eye to the portfolio. It's also worth noting that they haven't backed out of the state altogether, and their deal with HFH potentially offers them more strategic latitude in the future.
• Other Michigan Hospitals: Mixed. Our read is that most health systems are keeping steady conversations with partners. For those who haven't been, this deal has likely instigated those conversations — and potentially too late.
• Michigan consumer: Mixed. And that's probably the most important thing to remember. Our continued research on hospital mergers and acquisitions finds that outcomes and costs rarely improve because of them. As care deserts expand because of the financial pressure facing hospitals, we'll continue monitoring patient impacts.

What are the implications for me?

The answer here largely breaks down to whether you're in a growing or shrinking hospital market. Our hypothesis behind what's driving the merger activity in the Midwest is the shifting demand resulting from changes in the demographic. When organic growth is not easy to come by, inorganic growth becomes a necessity.

The other universal implication is that a potentially more defensible reason for recent mergers involves finding more capacity. A notable example is when academic medical centers merge with community hospitals to match clinical acuity with bed appropriateness.

But all of that work requires the deeper, difficult, and often unsung work of systemness. Given the wider financial and demand pressures that are prompting these acquisitions, it's worth investing efforts to redistribute clinical services, harmonize clinical standards, and pool talent across a wider network of care.