Appalachian Hospital Chains Eye Merger That Could Lead to Monopoly, Job Losses

Successful businessmen handshaking after good deal.
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Is a Monopoly an Answer to the Region’s Health Problems, or Will It Lead to Job Cuts?

Residents in the Johnson City, Tennessee area are wary that a merger between two hospital chains will lead to layoffs, while federal regulators are concerned that such a merger would lead to a monopoly.

The Mountain States Health Alliance and Wellmont Health System are considering joining their companies together, arguing that more money will be spent on issues like drug addiction and smoking, while redundancies will be eliminated.

Executives from the two hospital chains argue that money is being wasted and that service has been hampered by a healthcare “arms race” that has forced the two companies to duel each other for customers.

The merger would be an anti-competitive move, however, creating a consolidated monopoly in the 13-county region, which has ranked among America’s least healthy regions. The companies say that the merger would allow them to pool resources and deliver more effective care, but federal regulators are reluctant to approve the deal as it would violate anti-trust laws.

The companies are looking for a Certificate of Public Agreement, a little-used process that allows regulators to approve the merger if it is in the public’s interest. It would mandate that the companies operate under a state-supervised agreement that governs key parts of their business, including price setting.

The two hospital chains employ about 17,000 people, while other major employers in the healthcare industry in the area have backed the merger.

The bind that the area finds itself in is that both sides argue that job losses will take place. The companies believe that without the ability to pool their resources, they will have to lay employees off, which could severely damage employment in the region, considering how large these hospitals are.

On the other hand, residents believe that the consolidation of the two companies would lead to an elimination of jobs as the two companies find redundancies and eliminate those jobs.

Regulators are also concerned that while the companies have promised lofty investments and other improvements, the reality may be different from the projections.

 

Sources

In Appalachia, Two Hospital Giants Seek State-Sanctioned Monopoly,” Kaiser Health News, July 24, 2017.

Categories: Job Cuts, News

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