The latest development
LRGHealthcare has been hemorrhaging money since the inception of Obamacare. Having been unable to stem the losses it has now identified a potential partner. Will that partner provide deeper pockets until a turnaround can be accomplished? Let me suggest that the root cause question needs to be asked and answered. Is the answer to be found on the business side as a merger and acquisition (M&A) target? Or, has the nationalization of healthcare caused irreparable damage community based healthcare?
Mr. Donovan, LRGH CEO, is on record in favor of being an M&A target. He asserts that could help LRGH solve its immediate financial problems and allow growth. But then again, perhaps this shows us another blind spot in healthcare thinking. Shouldn’t the question should be: Why would there be a need for growth if the population of the community is not growing? When the hospital stopped offering maternity service was that because of the community growth opportunity?
The local paper, The Laconia Daily Sun reported there has been a series of hospital mergers in New Hampshire in recent months. They cited only one. Dartmouth-Hitchcock and GraniteOne Health. The merger includes Catholic Medical Center in Manchester. There are only ten hospitals in the state. For that reason the number of mergers will necessarily be limited, regardless of the time frame. Some have already occurred.
The packet full of mumbles
Interestingly, in New Hampshire the legislature has provided monopoly territory to each hospital. One might infer that enlarging monopoly territory will figure into the M&A game now in progress. If you have perhaps felt your provider choices limited in the past, just wait. When the M&A activity is resolved we will be different. The platitudes about vertical integration, horizontal mergers and vertical integration are bringing a new reality. Interstate players will enter the game sooner or later.
The proponents of the PPACA version of healthcare promise things like, it gives a community hospital access to a higher level of care and resources they can’t get on their own. They suggest that if LRGH were to go with an academic medical center it would gain a close relationship. This could mean an organization able to provide a higher level of care for patients. But would that happen here?
As we listen to the discussions ask yourself: Do we want hospitals, which are focused on economies of scale, improved market presence and creation of abilities to share higher-level, expensive providers? Think about it. It is good to talk about the community seeing positive programs and services, if it is true. But what is the change actually going to mean if no one is articulating what it means? Failing articulation of specifics, is it a pocket full of mumbles? Does it mean “Danger Will Robinson, Danger”?
We know the leadership of LRGH has said that they have few resources to invest. They have little money for new technology, programs and recruitment of medical staff. We know they have hope that any partnership might bring resources. But ask yourself: Will another business come to the area out of the goodness of its heart? Or must there be a way for it to cover the cost to provide service? Is it realistic to expect something for nothing?
The bigger picture
Obamacare brought you this mess. What you are hearing from Obamacare advocates, including most of the people making their living in healthcare, is generally about as true as the Obamacare promises. Remember, “If you like your healthcare plan, you’ll be able to keep your healthcare plan. Period. No one will take it away. No matter what.” Or how about this one, “Under my plan, no family making less than $250,000 a year will see any form of tax increase.” Maybe you preferred, “I will not sign a plan that adds one dime to our deficits – either now or in the future.” Then there’s the always popular, Obamacare will “cut the cost of a typical family’s premium by up to $2,500 a year.” And then again there’s always the “The new healthcare law will improve, not hurt, the quality of American healthcare.” Are you starting to see the pattern emerge here? How about this gem, “It’s not a government takeover: ‘I don’t believe that government can or should run healthcare.’”
Health care organizations have been merging throughout the nation because of a difficult financial environment. That is absolutely true. The healthcare industry is marked by high costs and low reimbursement rates. But this is a self-inflicted wound. The answer is not capitulation to a socialist utopia, attractive though it might sound. We cannot legislate the reimbursement rates below the cost to serve. The answer is to grasp that capitalism, which has raised over a billion people out of grinding poverty in the last two decades, can solve this issue by application of market forces tempered with compassion. It is not necessary to trade our health, freedom and prosperity for a pocket full of promises.