HCA-CMC deal could lead to higher costs

Jan. 10—HCA Healthcare's impending purchase of financially strapped Catholic Medical Center could lead to higher costs that patients pay for services and health insurance, according to an analysis done for state regulators.

But people needing help in paying their bills, known as "charity care," will benefit from a more generous program to be offered under HCA, CMC's trustees concluded.

By acquiring the state's second-largest hospital, HCA will expand its influence in the region beyond the three hospitals and related medical facilities it owns in New Hampshire.

"Such a strong presence within the state's more populated region is likely to increase the bargaining power for both CMC and the other HCA hospitals with commercial health insurance companies and other payers that negotiate prices paid for services at the HCA hospitals," said a report from the BerryDunn Health Analytics Group, hired by the state to analyze the proposed deal.

State regulators announced this week that the proposed HCA-CMC deal could proceed with additional conditions ironed out.

Under the deal, the for-profit HCA Healthcare will pay $110 million to acquire the 330-bed hospital on Manchester's West Side in a deal expected to close by Jan. 31. At least $40 million of the proceeds will go toward funding a new charitable foundation.

"Changes in New Hampshire's health care landscape are a fundamental reality given the financial and operational challenges facing hospitals and health systems, not only in New Hampshire, but across the country," said Steve Ahnen, president of the New Hampshire Hospital Association.

The HCA-CMC marriage "will undoubtedly bring tremendous stability to the ongoing operations today and into the future of Catholic Medical Center, ensuring patients continue to have access to the exceptional care they have come to depend on," Ahnen said in an email.

A report from the state Charitable Trusts Unit, which could have blocked the deal, said CMC's financial struggles, including a projected loss of $41.5 million in its 2024 fiscal year, "brought CMC to the brink of bankruptcy."

"To be sure, CMC's perspective in this regard appears to have been driven largely by CMC's financial circumstances and a belief that any deal that ensured a hospital will remain on Manchester's West Side in some form was better for the community than no deal at all," that report said.

For patients, cost, quality of care, and preservation of services are three key issues they will focus on with the HCA takeover.

Costs

Hospitals and insurers negotiate prices that patients will pay for services (and sometimes reach a standoff, as Anthem Blue Cross and Blue Shield and St. Joseph Hospital of Nashua did at year's end).

"A substantial body of research has shown that hospital mergers and acquisitions" often result in higher prices for people with private health insurance and "this may be one outcome," according to BerryDunn.

"Higher prices will put upward pressure on health insurance premiums and additional financial burden on patients through cost sharing, such as with deductibles, coinsurance, and copays," the report said.

"In addition to higher prices paid through cost sharing, cost sharing levels are likely to increase faster as employers and individuals seek opportunities to avoid premium increases," BerryDunn wrote

Asked about future costs for CMC patients, HCA spokeswoman Ellen Miller said HCA has a history of providing charity care and discounts for those without insurance or are underinsured.

"What most people who have insurance pay, however, has more to do with their insurance plan, including their copay and deductible," said Miller, senior director of marketing and communications for HCA's New Hampshire market and Portsmouth Regional Hospital.

"HCA Healthcare participates in federal insurance programs, such as Medicare, Medicaid, and TriCare, as well as with many private insurance companies to ensure affordable health care access to the community," Miller said in an email.

HCA Healthcare reported the second-highest financial operating margin among 43 health systems nationwide ranked by Becker's Hospital CEO Report. HCA recorded an 11.8% margin for calendar year 2023.

Before Tennessee-based HCA took over Frisbie Memorial Hospital in 2020, the Rochester hospital was losing money, with a financial operating margin of minus-4% during its shortened 2020 fiscal year ending Feb. 29, 2020. HCA took over March 1, and the hospital's operating margin turned around to 15% during HCA's first fiscal year despite the coronavirus pandemic. The hospital posted a 9% margin for 2022, according to federal figures.

The Kaiser Family Foundation, which BerryDunn also relied on, said in a 2024 paper that "studies have typically found that consolidation leads to higher health care spending, which could increase costs for families, employers, states, and public programs, like Medicare and Medicaid."

Mark Hall, a professor of law and public health at Wake Forest University in Winston-Salem, North Carolina, has done extensive research on HCA's acquisition of Mission Hospital in Asheville and warns of possible challenges ahead at CMC.

"While HCA brings much-needed resources to CMC, based on experiences at other HCA hospitals (including Mission Hospital), I expect that patients in financial need will find it more difficult to qualify for charity care unless it is an emergency," Hall said in an email. "Also, HCA is likely to reduce patient-care staffing, which could lead to a drop in the quality of care as measured by patient surveys."

Quality of care

Catholic Medical Center had mixed results on ratings measuring quality of care compared to other HCA hospitals in New Hampshire, according to results compiled by BerryDunn.

A hospital quality survey by the federal Centers for Medicare & Medicaid Services gave CMC a four-star rating on quality-of-care measures. HCA-owned Parkland Medical Center in Derry earned five stars while HCA's Portsmouth Regional Hospital got three stars and Frisbie notched two stars.

CMC also earned four stars in its patient survey. All three HCA hospitals in New Hampshire earned three stars from their patients.

In another measure, CMC earned an overall patient safety grade of C in 2024, and B, C, and D grades in 2023, 2022, and 2021, respectively, according to an independent rating system produced by the Leapfrog Group, a nonprofit watchdog organization that bills itself as a voice for health care consumers.

CMC's C grade was comparable to the grade earned by Concord Hospital but was lower than the B grade earned by Elliot Hospital in Manchester and St. Joseph Hospital in Nashua. CMC's grade was the same earned by Frisbie but lower than the B grade reported for Parkland and the A grade for Portsmouth.

Services offered

State regulators blessed the deal after HCA agreed to maintain maternity services and behavioral health for at least 10 years, subject to certain contingencies.

CMC handles more than 1,000 births and 31,000 emergency department patients per year.

As part of its 2020 acquisition of Frisbie, HCA promised to keep the labor and delivery services at that Rochester hospital open for at least five years, but it did not.

As a result, HCA and the Attorney General's Office reached a settlement in 2023 that called for HCA to provide $2.75 million to use to improve the health and well-being of Rochester-area residents.

HCA has agreed to invest $200 million in capital over the next 10 years as part of the CMC agreement.

Proceeds from the sale will help fund a foundation, with at least $40 million. The foundation is required to contribute $750,000 a year for the next 10 years to the Healthcare Consumer Protection Trust Fund.

Half of that amount will fund the Poisson Dental Facility and the Health Care for the Homeless program.

HCA also will contribute a minimum of $300,000 a year for those two efforts over the next three years, according to CMC. Any supplemented funding will come from the foundation or other community partners.

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