The Current Pace of Hospital Mergers

Question: What is going on with hospital mergers, and is the trend continuing?

Answer:  Without question, the recent trend has been for hospitals to merge, creating ever larger entities. Although hospital merger and acquisition transactions nationally have declined somewhat from the levels reached in 2015, there were still 64 mergers and acquisitions involving United States based hospitals in the first three quarters of 2016. Indications have been that this trend will continue. For example, on June 21, 2016, a new entity named “Hackensack Meridian Health” was formed when the merger of Hackensack University Health Network and Meridian Health was finalized, creating the second-largest hospital system in New Jersey, said to unite 11 hospitals in seven counties from the New York border to the Jersey shore. The trend has been to approve these mergers, despite opposition from the Federal Trade Commission under the antitrust laws. However, some recent court decisions may be an indication that this trend is reversing. In our October issue of StatLaw® New Jersey, we reported on the United States Court of Appeals for the Third Circuit’s opinion blocking a proposed merger between the two largest hospitals in the Harrisburg, Pennsylvania area, Penn State Hershey Medical Center and PinnacleHealth System. In Federal Trade Commission v. Penn State Hershey Medical Center, – F.3d –, 2016 WL 5389289 (3d Cir. 2016), filed on September 27, 2016, the Court reversed a decision of the United States District Court for the Middle District of Pennsylvania, which had refused to issue a preliminary injunction blocking the proposed merger. Subsequent news reports have stated the hospital systems have abandoned their integration efforts as a result of this decision. On October 31, 2016, in Federal Trade Commission v. Advocate Health Care Network, – F.3d –, 2016 WL 6407247 (7th Cir. 2016), the United States Court of Appeals for the Seventh Circuit reversed an Order of the United States District Court for the Northern District of Illinois which had denied the FTC’s injunction seeking to block a merger between Chicago-area health systems Advocate Health Care Network and NorthShore University Health System, ruling the District Court’s geographic market finding to have been “clearly erroneous.” The merger had been stayed pending the appeal, and the 7th Circuit, leaving the stay of the merger in place, remanded the case to the District Court to reconsider the injunction in light of the appellate Court’s opinion. It is perhaps too early to make a prediction, but it is possible this case, along with Penn State Hershey Medical Center, indicates a trend of stricter scrutiny of hospital mergers.

Weekly Charting Tip:

Must your chart somewhere indicate the length of your E/M visit in order to be reimbursed? Unless the majority of your visit concerns counseling the patient, the answer is NO! The “typical times” attached to the various E/M codes are suggested times, not mandatory times. The key to your chart is its content, not its length, or the length of the patient encounter. Similarly, putting down the amount of time of the patient encounter, by itself, does not entitle you to bill a particular E/M code. Again, we are referencing the typical office visit. Until next week! – Larry Kobak

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