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Report: Hospital Consolidation and Transformation is Accelerating

No matter where the Supreme Court lands on the Obama Administration’s health insurance mandate, there’s no question that the transformation underway in healthcare today will continue. One of the most striking changes in the last few years – consolidation and transformation within the hospital market – is the subject of a recent study by Moody’s Investors Service.

As reported by the New York Times’ Reed Abelson, Moody’s says the arrival of value-based reimbursement will accelerate techtonic shifts already underway in the hospital market. Big hospital groups are getting even bigger as smaller, stand-alone hospitals and groups seek financially strong partners. Along the way, some hospitals are joining forces with former adversaries, health insurers and for-profit companies.

Abelson calls out two notable examples of these trends: North Shore-LIJ health system in New York, and Pittsburg-based West Penn Alleghany Health System.   Both health systems use a full suite of Allscripts solutions including Sunrise Acute Care EHR in their hospitals and Allscripts EHR and practice management for their employed and affiliated physicians.

North Shore-LIJ, one of the nation’s largest nonprofit hospital groups, announced earlier this month that it had entered a strategic alliance with Hackensack University Health Network in New Jersey. Based on Long Island, North Shore-LIJ bought Lenox Hill Hospital in a move that brought it to Manhattan in 2010. According to the Moody’s report, North Shore-LIJ’s alliance with Hackensack could be a precursor to the 15-hospital system’s expansion beyond New York State.

(Watch a video describing North Shore-LIJ’s use of healthcare IT to create a Connected Community of Health here).

In Pittsburgh, the insurer Highmark is awaiting approval of its bid to acquire West Penn Alleghany, a five-hospital system.  The Highmark case is an example of insurers joining with hospitals to improve their competitiveness, something they’ll need to do as accountable care organizations (ACOs) bring hospitals and physicians together to improve coordination and lower costs across large communities.

According to Moody’s, “insurers need to think about combining with hospitals and doctors so they can be more of a one-stop shop.”

QUESTION: What do you think the future holds for hospitals?  More consolidation?  More acquisitions by insurers? Or will insurers find other ways of adjusting to value-based care and ACOs?

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