Yale-New Haven Health System Expansion Threatens to Drive Up Prices

“Hospital Market Concentration in Connecticut: The Impact of Yale-New Haven Health System’s Expansion” documents how the proposed take-overs will leave the Yale-New Haven System with nearly 60% of the inpatient hospital market in the southern half of Connecticut and 83% of the market around New London, levels at which federal standards warn against unnaturally high prices.

 

“Access and cost are the two big health care issues that raise deep concerns with Connecticut families,” said Ann Pratt, director of organizing at the Connecticut Citizen Action Group (CCAG). “Hartford HealthCare has taken over Windham and cut services. Now Yale-New Haven is taking over L+M, which threatens price increases. Connecticut’s families cannot afford more expensive healthcare,” added Pratt, whose group is among seven health advocacy and labor organizations that produced the report.

 

Twenty years ago, all Connecticut hospitals were independent, but if all currently proposed mergers are approved, more than 80% of inpatient discharges would be from hospitals affiliated with large systems. The potential purchase of Lawrence + Memorial Health, owner of Lawrence + Memorial (L+M) Hospital in New London and Westerly Hospital in Rhode Island, is currently pending before state regulators for approval.

 

“As patients are asked to pay higher and higher deductibles and copays, the prospect of price increases driven by hospital consolidation is a major problem for families that can’t afford comprehensive coverage, and for state government,” said Connecticut Health Policy Project Executive Director Ellen Andrews, PhD. “Payment reforms are encouraging providers to band together, but how will those reforms actually save money if they create monopolies?” added Dr. Andrews. 

 

Studies show that price increases of more than 20% follow hospital mergers in highly concentrated markets, and the new report finds that markets in Connecticut are already highly concentrated. The report studies concentration in five regional markets. If Yale-New Haven acquires L+M and fully absorbs Milford, the growth in concentration in those areas would be between 50% and 900% higher than the level at which federal regulators presume that mergers will create enough market power to artificially raise prices.

 

The report’s release comes on the same day the General Assembly heads into a special session called by Governor Dannel P. Malloy to close a $350 million state budget deficit. In this context the authors are calling on state regulators to conduct a thorough cost and market analysis of Yale-New Haven’s expansion prior to any decision on the L+M deal. 

 

“Increased market power for YNHHS would strain the budgets of municipalities and of the state, which are among the biggest purchasers of healthcare,” said Council 4 AFSCME Executive Director Sal Luciano. “It stretches credibility to think that town governments in Eastern Connecticut will be able to negotiate their current L+M prices with the Yale-New Haven Health System when it controls nearly a third of the statewide market,” said Luciano.

 

“We represent more than 1,600 nurses, technicians and healthcare workers at L+M whose jobs and personal healthcare may be affected if the Yale-New Haven system takes over,” said AFT Connecticut Executive Vice President John Brady, RN. “Our members care deeply about the service that we provide for our community, which is why we need to make sure that this deal is completely transparent. The community, workers, and other providers all need to know more about what will happen to both the quality of care and how much it will cost at L+M. That starts with prices,” added Brady.

 

“The majority of the people we care for and support rely on state and federal funding for their care, so they are at increased risk if consolidation and acquisition push prices higher,” said District 1199, New England Health Care Employees Union, SEIU Policy Director Deborah Chernoff. “Because of the inherent risks of illness and injury in their work, our 25,000 health care members are heavy consumers of healthcare and therefore particularly attuned, both professionally and personally, to the potential rewards of reform and the risks of change driven by market-share ambition,” added Chernoff.

 

“For hotel and food service workers, affordable healthcare can be the difference between living in poverty and not,” said UNITE HERE! Local 217 Secretary-Treasurer Connie Holt. “Our members work hard to be cost-conscious healthcare consumers, but all the work we’ve done to protect ourselves will come to nothing if large hospitals can increase our prices at will. We supported Senate Bill 811 because citizens need to be fully informed about the impact of mergers like this one,” added Holt.

 

Senate Bill 811, “An Act Concerning Hospitals, Insurers and Health Care,” passed in the legislature earlier this year with strong bipartisan support. Governor Malloy signed it into law in June. Its increased consumer protection and community access provisions won’t impact the proposed take-over of Lawrence + Memorial because they are effective January 1 of 2016.

 

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