Hospitals will likely start getting less Medicare reimbursement, and find it hard to persuade private insurers to pay more. Public and private insurers are "demanding that hospitals work better with doctors both to coordinate care and to improve the quality of care so people stay out of emergency rooms and avoid hospital stays altogether," Abelson reports. These changes are forcing mergers and "strategic alliances," like that between North Shore-LIJ Health System, one of the largest nonprofit hospital groups in the U.S., and Hackensack University Health Network in New Jersey.
Goldstein told Abelson there could be a surge in partnerships between for-profit hospital groups and private equity firms, which has already happened in Boston with Catholic hospitals. Other equity groups could enter the market depending on how well existing equity partnerships perform. Health-insurance companies could also become possible buyers as a way to improve competitiveness and become a health care "one-stop shop," a co-author of the Moody's report said. As a result of the restructuring, patients will likely have less hospitals from which to choose, but there will still be some small, stand-alone hospitals in rural areas, Abelson reports. (Read more)