Wisconsin Has Seen Four Major Hospital Mergers Over the Last Year

Tuesday, May 9th, 2023 -- 8:22 AM

(By Joe Schulz, Wisconsin Public Radio) Wisconsin has seen four major hospital mergers either finalized or announced over the last year, and some experts fear that increased health care consolidation could lead to higher prices for patients.

According to Joe Schulz with Wisconsin Public Radio, late last year, Gundersen Health System and Bellin Health completed a merger. As did Advocate Aurora Health and Atrium Health. That October, Marshfield Clinic Health System and Essentia Health announced they were in talks to merge.

And last month, Froedtert Health and ThedaCare also announced plans to merge. Hospital officials say the mergers are meant to improve patient care and stem from organizations having similar missions and visions.

Health care mergers are nothing new. The industry has consolidated substantially over the last two decades, and at a more rapid pace since 2010, according to a 2020 study by Harvard Medical School scientists.

Ashley Swanson, associate professor of economics at the University of Wisconsin-Madison, said hospital mergers, on average, increase prices, while having a negligible effect on patient care. Swanson said those price increases impact insurers in the short-term, but lead to higher insurance premiums and higher out-of-pocket costs for patients in the long-term.

"It seems like they primarily increase prices when the merging hospitals are located close to one another," she said. "But there is some relatively new evidence suggesting that cross-market mergers can sometimes increase prices as well." Cross-market mergers are consolidations of entities that cover different geographic areas.

Those have been the primary health care mergers in Wisconsin recently. For example, Froedtert serves the southeastern part of the state while ThedaCare primarily serves northeast and central Wisconsin. Swanson said more research is needed to evaluate the full effect of cross-market mergers on prices, and it's too early to know what the effects of recent mergers will be in Wisconsin.

"Putting those two things together, higher prices and no better care, it doesn't seem like mergers are a good deal for patients, payers or society," she said. "That's all on average, so that may be averaging out beneficial effects of some mergers against detrimental effects of other mergers."

Brian Potter, chief financial officer for the Wisconsin Hospital Association, said health care mergers in Wisconsin haven’t been aimed at eliminating competition. Rather, he said they’ve been mergers to build capabilities and scale.

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