Oregon bill to give OHA control over mergers and acquisitions passes out of committee – State of Reform
Patrick Jones | April 19, 2021
House bill 2362 recently voted from the House Health Care Committee on a party line. The bill requires healthcare providers and hospitals to obtain approval from the Oregon Health Authority (OHA) prior to any merger, acquisition, or affiliation transaction.
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The bill also establishes an advisory board for the OHA to determine the benefits and validity of the merger. No more than a third of the board members may be representatives of health care providers and hospitals. This allows the community, which primarily affects it, to have a voice in these transactions.
Proponents argue that mergers and acquisitions result in higher costs and lower overall quality of care as large hospitals and health systems become larger and more significant. The Bill’s main sponsor, Rep. Andrea Salinas, Vice Chair of the House Committee On Health Care, said:
“Before these consolidations take place, we need to understand how this will affect consumers. Will these consolidations generate cost savings for consumers? Or will it be a venture capital investment where the savings go back to investors? “
According to Salinas, the OHA would not block the transaction of a necessary merger that would help keep the hospital or healthcare system alive. However, validation in-process can help identify potential savings that are not beneficial to the payer’s wellbeing.
“If there is an emergency and you need to keep the lights on, this will be considered as we know that not all consolidations are bad. So if there’s a provider in a rural area who needs help, we don’t want to prevent someone from walking in and helping them keep the lights on. But now it’s time to put a magnifying glass on what’s happening because we don’t see the savings that come from going back to consumers. The savings stay in the systems and I think companies see these savings. “
Dr. John McConnell, professor of emergency medicine at Oregon Health and Science University (OHSU), said in a public hearing:
“The consequences of higher consolidation prices for Oregonians would be lower wages and possibly poorer health.”
Those opposed to the bill cite the many rural hospitals and primary care providers saved from shutdown by mergers and acquisitions. According to capital insiders, this bill risks the appeal of investing in healthcare in Oregon. Becky Hultberg, President and CEO of the Oregon Association of Hospitals and Health Systems (OAHHS) said:
“In Oregon, partnerships have maintained and improved access to quality primary care, particularly in rural and medically underserved parts of the state. Under the law, the Attorney General’s Office is reviewing the proposed mergers to ensure that they are in the public interest. Supporters of HB 2362 have not identified an Oregon issue that this guideline could resolve. Thanks to health systems partnerships, a recent study by the American Hospital Association showed that health care costs actually fell 2.3% after a merger. “
Hospitals and healthcare systems are more concerned about dealing with the COVID-19 pandemic than they are about merger and acquisition legislation. They believe more time and effort will be needed to address the pandemic and its lasting effects. Hultberg said:
“This legislation is not required and our focus should be on providing Oregonians with the best care at a lower cost.”
The bill is currently on the Joint Means and Ways Committee, awaiting its first public hearing.