| NEWARK, N.J., Sept 19
NEWARK, N.J., Sept 19 Seven hospital systems in
New Jersey and Pennsylvania will form what executives say will
be the largest U.S. healthcare alliance in the country.
The number of hospital mergers has soared in the past
several years as providers band together to increase their power
to negotiate higher reimbursement rates from insurers.
Called AllSpire Health Partners, the alliance will allow the
member institutions to save on costs and share medical
expertise, the hospital systems said on Thursday.
The alliance is part of a trend towards market consolidation
as the Affordable Care Act is pushing hospitals to achieve
greater negotiating leverage, said Joel Cantor, director of the
Center for State Health Policy at Rutgers University.
The alliance will include such systems as the Hackensack
University Health Network in New Jersey and the Lehigh Valley
Health Network in Pennsylvania and have combined annual revenue
of $10.5 billion.
"Really we're focusing on two aspects: how to improve the
quality of care and how to reduce the cost of care," said Joe
Trunfio, president and chief executive officer of Atlantic
Health System in Morristown, New Jersey.
Nationwide, there were 36 such mergers or acquisitions in
2009, 69 in 2011 and 72 last year, according to FTI Consulting's
Center for Healthcare Economics and Policy.
The wave of mergers has raised concerns that large hospital
systems will drive up healthcare costs because they have greater
leverage in negotiations with insurers. But Trunfio told Reuters
that because AllSpire is an alliance and not a merger or
acquisition that will not happen.
Still, AllSpire hopes to cut costs by 3 percent to 4 percent
over the next few years, he said.
Cost-savings will be more important under the law known as
Obamacare because reimbursement will shift from a traditional
fee-for-service model to payment that is based on improving
outcomes for patients, Trunfio said.
Trunfio said the alliance will not cause employees to be
laid off or hospitals to close.
The other hospital systems entering the alliance include
Meridian Health in Neptune, N.J., and Lancaster General Health,
Reading Health System and WellSpan Health, all in Pennsylvania.
The combined systems include 25 hospitals and at least five
affiliate hospitals, including in New York State. The alliance
will be open to additional hospitals that join the systems,
(Editing by Sharon Begley and Kenneth Barry)