Potential Catholic Medical Center-HCA deal highlights pressures on local hospitals — and their patients

Catholic Medical Center’s plan to join HCA Healthcare — the for-profit health care giant that also owns hospitals in Portsmouth, Rochester and Derry — is still in its early stages.

But before the deal becomes final, it will need buy-in from New Hampshire Attorney General John Formella, who says a proposed merger of this size will “merit a lot of close scrutiny.”

That includes how it might impact costs and access to care for patients, Formella said.

“In any transaction, we are going to want to see a commitment that the acquiring hospital keeps critical services going in the hospital that they've acquired,” he said.

And that’s where HCA’s recent record in New Hampshire could also be a factor. Last year, the company announced it was shutting down the labor and delivery unit at Frisbie Memorial Hospital — after pledging to keep that service open when it bought the Rochester hospital two years earlier.

“There's no question that prior experiences with an organization will inform a review of a future transaction, and trust is really important,” Formella told NHPR in a recent interview. “So I think it is safe to say that HCA has some work to do to continue to rebuild trust with the state.”

HCA said closing the hospital’s labor and delivery unit was unavoidable due to dropping birth rates and the departure of OB-GYN providers. The company also said it’s invested $40 million in expanding other services at Frisbie since the purchase, including oncology, emergency services and behavioral health.

Catholic Medical Center leaders say they also need significant investment to ensure their survival. And in this sense, the potential deal with HCA illustrates the economic pressures that hospital executives say are leading them to seek mergers and affiliations with larger, better-resourced organizations.

But it also highlights key concerns facing New Hampshire — about how much health care will cost, and how accessible it will be — as the industry consolidates into ever-larger health systems.

CMC says consolidation is key to its future

Dan Tuohy

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NHPR

Last year, Formella’s office blocked a proposed merger between GraniteOne, a health care system that includes Catholic Medical Center, and Lebanon-based Dartmouth Health. At the time, state officials determined that it would reduce competition and potentially drive up prices if two of the state’s largest health systems combined.

CMC President and CEO Alex Walker said the hospital’s board began looking for a new health system to join after that deal fell through.

“The strategy of remaining a standalone, independent Catholic hospital in Manchester, New Hampshire, long term, is probably not a winning strategy,” he said in a recent interview with NHPR.

He said the hospital’s leaders concluded rising labor costs and other expenses, along with consolidation among competitors, would make it hard to survive without the resources of a larger system.

The goal of joining a company like HCA is to “not just eke out a small margin, but, you know, have enough to be able to invest” and expand services, Walker said. The hospital would become a for-profit but retain its Catholic identity, which comes with certain ethical guidelines and a commitment to charitable care for the uninsured.

“We're not talking about subtraction,” Walker said. “We're talking about: How do we grow – not just maintain, but grow – what we have for patients in New Hampshire.”

In a written statement, Dean Carucci, president of HCA New England Healthcare, expressed “great admiration for CMC's long history of caring for the Manchester community.”

“We believe this partnership will not only preserve CMC’s decades-long commitment to providing high-quality care in the Catholic tradition, it would also ensure that we can meet the growing demand for quality care here in New Hampshire for years to come,” he said.

Standalone hospitals are increasingly rare, in NH and elsewhere

The increasing consolidation of hospitals in New Hampshire is part of a national trend.

“Pressures from the health care system, pressures from community needs and pressures around health care economics writ large are really making hospitals question, how do we survive?” said Lucy Hodder, a professor of health law at the University of New Hampshire Franklin Pierce School of Law.

For many, the answer is to merge or affiliate with a larger health system.

Dan Tuohy

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NHPR

Over the past decade, Dartmouth Health has expanded in the western part of the state. Two Boston-based health systems – Mass General Brigham and Beth Israel Lahey – have moved into southern New Hampshire, acquiring hospitals in Dover and Exeter. Hospitals in the North Country and the Nashua-Manchester area have come together to form regional health systems.

Only a handful of New Hampshire’s 26 hospitals remain unaffiliated – and some of them are actively looking to change that.

Valley Regional Hospital in Claremont has a proposed affiliation with Dartmouth Health that’s currently under review by the state. Littleton Regional Healthcare announced in March that it’s exploring potential affiliation options as well, citing workforce challenges and the need to continue investing in technology and facilities.

Some of that has to do with rising costs and changes in how insurers like Medicare are paying for services, said Steve Norton, a consultant who previously oversaw strategic planning for the system that includes Elliot Hospital and Southern New Hampshire Medical Center. The increasing specialization of medicine also plays a role.

“You don't have an orthopedic surgeon; you have a hand specialist and you have a foot specialist,” he said. “And in order to be able to make that service accessible, you have to have a bigger population to serve.”

What this means for affordability and access to care

Paul Cuno-Booth

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NHPR

As hospitals consolidate, experts and regulators have raised concerns about the impact on the affordability and availability of health care.

There’s limited data on New Hampshire specifically. But researchers who’ve studied other markets have found that hospital mergers tend to raise prices, said Chris Garmon, an assistant professor of health administration at the University of Missouri-Kansas City.

“Mergers of competing hospitals, on average, lead to higher prices,” he said. “There is a substantial literature showing that.”

While the research on how mergers affect quality is more mixed, he said it generally seems to decrease.

“There could be a particular merger that leads to improved quality,” he said. “But on average, the research tends to show that mergers of competing hospitals lead to higher prices, lower quality.”

Another question is how a merger impacts what services are available in the community.

In some cases, acquisitions have saved struggling hospitals from closing altogether – like Concord Hospital’s purchase of Lakes Region General Hospital in Laconia and Franklin General Hospital out of bankruptcy in 2021. Frisbie was also financially troubled when HCA took it over.

Even when hospitals aren’t in immediate danger, their executives often say joining a larger system will increase access to specialists, and give them more resources to invest in better technology and services.

“The challenge of running a stand-alone community hospital is just growing greater and greater,” said Steve Ahnen, president and CEO of the New Hampshire Hospital Association.

He said the costs of maintaining facilities, investing in new equipment and technology, and retaining enough doctors, nurses, specialists and other staff have put small hospitals in particular under increasing strain.

“I would say the risk of losing access to services is much greater without the support of a system or partnership or some sort of affiliation,” Ahnen said.

But there are also examples of hospitals cutting important services after being acquired. A 2019 study by analysts at the RAND Corporation, a nonprofit research group, found that rural hospitals tended to perform better financially after affiliating with larger health systems – but also reduced access to certain services, including primary care and care related to pregnancy and childbirth.

“The devil's in the details,” said Yvonne Goldsberry, president of the Concord-based Endowment for Health. “You really have to look at what's at stake for the community. What do they have before, and then what are they going to have after?”

Hodder said hospitals may have good reasons for pursuing mergers or affiliations. But without careful planning, she worries the end result will be a health care system geared too much toward expensive, high-end care.

“Are we just going to continue an arms race to the highest possible level of care to keep all of these huge, massive systems floating?” she said.

“If we don't ask these questions, we may end up with very few labor and delivery units, and hospitals that haven't invested in primary care,” she added.

New Hampshire officials are taking steps to better understand the impacts of these deals. This year, lawmakers created a new Health Care Consumer Protection Trust Fund, which will support efforts to make sure the health care market is working for patients.

The attorney general has the authority to negotiate payments from health systems into the fund as part of antitrust settlements. As one example, when the state allowed Exeter Hospital to become part of Massachusetts-based Beth Israel Lahey Health earlier this year, it required the health system to pay out $10 million over 10 years.

That money will pay for a new independent research body to monitor and analyze the New Hampshire health care market. Formella said that will give patients more transparency about prices and help state officials make more informed decisions on health care policy.

Ultimately, experts said the trend toward consolidation is unlikely to stop. The key question is how to make sure health care is accessible and affordable for most people.

As demographics shift and the economics of health care change, Goldsberry said the state may need to find new ways to invest in critical services — like labor and delivery.

“We have to think bigger. Like what do we do with doulas? Can we have birthing centers that are kind of close to a hospital? How do we practice completely differently?” she said. “Because some of those services just are never going to come back, because of the low volume in births.”

And Goldsberry said that question goes well beyond hospital consolidation.