Consolidated Health Care System Breaks Promises to Protect Consumers Once Merger is Approved

By Consumers for Quality Care, on October 17, 2023

Consolidated Health Care System Breaks Promises to Protect Consumers Once Merger is Approved

Five years ago, rival hospital companies in an Appalachian region convinced lawmakers that their merger would not hurt consumers, but an investigation by KFF Health News  last month reports that these promises have not been kept.

Ballad Health controls all 20 hospitals in a 29-county region with more than 1 million residents in Tennessee, Virginia, Kentucky, and North Carolina. Ballad was able to have anti-monopoly laws waived, but in exchange for this waiver, lawmakers required the company to provide charity care and meet certain other conditions.

To date, Ballad has not fulfilled its charity care obligation and has struggled to meet about 80 percent of quality benchmarks. Ballad’s CEO, Alan Levine, attributes these issues to the pandemic and factors beyond its control, such as changes to the Medicaid program. But Ballad’s financial statements tell a different story. Over the last two fiscal years, Ballad has generated more than $200 million in net income while also receiving $175 million in pandemic relief funds. And since the merger, Levine’s compensation has nearly doubled to about $4.3 million.

The Federal Trade Commission (FTC) has railed against these types of mergers in recent years. The agency has argued that hospital consolidations usually result in higher prices for consumers and a lower quality of care. Ballad, in particular, has faced criticism for downgrading trauma centers and closing vital facilities for patients with life-threatening conditions, leading to protests. The hospital system has also fallen short of its annual charity care commitment by tens of millions of dollars each year.

It should be noted that even while Ballad was failing to meet its charity care obligations, it was filing collection lawsuits against consumers during their first two years of operation, a fact revealed in reporting by the The New York Times and Modern Healthcare.

Decreased competition hurts consumers, often leading to fewer options for care and higher out-of-pocket costs. CQC urges regulators and lawmakers to scrutinize hospital mergers and to work to ensure that consumers don’t foot the bill for anti-competitive practices.