When the University of South Alabama formally takes over Providence Hospital, it will command a market share that could dictate pricing, according to an expert who studies health care economics.
will reduce the number of hospital owners in Mobile from four to three. Robert Burns, a professor at the Wharton School at the University of Pennsylvania, told FOX10 News that reduced competition usually is bad for patients.Burns said when a city has a dominant hospital company, it has more pull with insurance companies to set higher reimbursement rates. That, he said, translates into higher costs for patients.
At a news conference on Tuesday, University of South Alabama officials downplayed the possibility the deal could lead to higher prices. Despite the fact that Providence is less than seven miles from USA Health’s University Hospital, CEO Owen Bailey said there has been little overlap between USA Health and Providence.
University officials have said patient care will improve after the merge. But Burns expressed skepticism. He said economics, not patient care, drive hospital mergers and acquisitions. He added that hospitals still are struggling under increased costs from the COVID-19 pandemic. He noted that labor costs jumped dramatically with the surging demand for health care workers. Hospitals had trouble retaining nurses and had to pay higher rates for traveling nurses, he said.
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