Scott Rasmussen's Number of the Day for May 26, 2017
The Number of the Day columns published on Ballotpedia reflect the views of the author.
May 26, 2017: Last week, Steward Health Care announced plans to buy Tennessee-based IASIS Healthcare for $1.9 billion. According to CNBC’s Jake Novak, “The deal will make Steward the largest private for-profit hospital operator in the country with 36 hospitals across 10 states.”[1]
| States with Steward hospitals[2] | States with IASIS hospitals[3] |
|---|---|
| Florida | Arizona |
| Massachusetts | Arkansas |
| Ohio | Colorado |
| Pennsylvania | Louisiana |
| Texas | |
| Utah | |
| The Steward-IASIS merger will make Steward Health Care System the nation's largest private for-profit hospital operator, with 36 hospitals across 10 states. | |
Novak notes that this transaction highlights a dramatic increase in healthcare mergers over the past few years. A record-setting 1,318 such transactions occurred in 2014, valued at $388 billion altogether. The very next year, that record was shattered: 2015 saw 1,503 deals, valued at $557 billion—a 44 percent annual increase.
To put those numbers in perspective, the number of transactions in both 2014 and 2015 were higher than the combined total for all years from 1998 to 2012. Novak believes the pace of mergers was driven primarily by the financial incentives of Obamacare.
The number of transactions dipped a bit in 2016 because it takes time to absorb all of these mergers. Novak also believes that new regulations were a factor and that the Steward acquisition may signal the return of what he calls the "merger mania."
Why does this matter? Because, Novak says, hospitals charge more for care than other medical facilities—and this means that “when a hospital buys up a formerly private practice, it can and does charge ... more for essentially the same service that was less expensive the day before.”
Novak believes that the rapid merging has been the primary force behind the increase in healthcare premiums. And he’s not very confident about the ability or willingness of official Washington to do anything about it. “Obamacare made this problem worse and there's nothing in the current Republican replacement to fix it," he writes. "That's no coincidence. The hospital industry has both political parties under its sway.”
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