Mergers and Acquisitions in Health Care: Key Impacts

Introduction

As the human race has evolved, so too has health care — becoming increasingly complex and expensive, growing into a multi-trillion dollar industry worldwide (Levins, 2000). In fact, the use of the term "industry" to describe health care itself leads to the topic of this paper: the impact that mergers and acquisitions have on health care from a variety of perspectives. By using specific examples, this paper discusses these multiple impacts in an effort to better understand what mergers and acquisitions mean to health care organizations, services, workers, and patients alike.

Impact on the Organizations Involved

To begin, it should be understood that health care has become an industry in and of itself because of several factors: the population boom, which leads to more people needing medical services; the proliferation of new diseases, which often emerge because of environmental factors; and a general increase in the standard of living in many nations, which makes health care available to more paying patients (Levins, 2000). All of these factors have turned health organizations into businesses, and like all businesses, mergers and acquisitions are commonplace.

What this means for the organizations involved is, for example, the disappearance of small, regional health care providers in favor of large conglomerates — making profit and loss factors, rather than quality of care, patient relations, and worker interests, the primary priority.

Because health care is quite literally a matter of life and death for patients, when care is compromised due to business decisions and patients are injured or die as a result, organizations must also contend with lawsuits and negative public image. In fairness, litigation has become commonplace across all industries given the increasingly litigious nature of society as a whole. Overall, one of the most critical areas affected is the delivery of services itself, which is discussed in the following section.

Impact on the Delivery of Health Care Services

Services have changed — or more precisely, the availability of those services has changed — because of mergers and acquisitions in health care. For example, when localized hospitals and clinics are closed and regional facilities are put in their place, those who live far from the new facilities have less access to care (Singer, 2002).

When these facilities are effectively downsized and the delivery of services is compromised, an ethical issue also arises regarding the social responsibility of health care providers to make services readily available. Health care organizations must keep profits in mind, but where the line between profits and ethics should be drawn has created a great deal of controversy (Ginsburg, 1996). The World Health Organization's framework on universal health coverage reflects a global recognition of this tension between accessibility and financial sustainability.

Conclusion

Overall, research has shown that when health care becomes a business rather than a public service, there are some negative effects, and in fairness some positive ones. Perhaps the most important thought to take away from this discussion is that health care organizations, while having to be profit-conscious as a matter of necessity, must not forget the human element of what they are doing in order to avoid catastrophe.