Article
What the report argues
Federal merger reviews tend to center on one question: will the combined hospitals raise commercial prices? The new study, prepared by Kaufman Hall at the AHA’s request, says that lens leaves out most of the people hospitals serve. About 60% of acute care patient days in 2023 belonged to Medicare, Medicaid and Medicare Advantage patients, whose rates are largely set by government programs. Commercial revenue looks larger only because commercial rates are more than double public rates.
Who seeks partners, and what happens when deals fail
The report looks at the 12 hospital transactions the FTC has sued to block since 2015. On average, targets had 64% of patients covered by government programs, compared with 60% for acquirers. Two-thirds of those targets had a notable event in the four years before the proposed deal, such as a facility closure, labor reductions, a service closure or bankruptcy.
The financial data on cancelled deals is the part boards should study. Across 88 cancelled transactions, median operating margin fell by about half in the year after the deal collapsed and days cash on hand fell 38%. Average age of plant rose as well. The authors say a failed partnership can speed decline by cutting off access to capital and operating expertise.
The study also reviews 221 counties with exactly two hospitals under separate ownership and finds that most pairs offer complementary rather than overlapping service lines, something standard concentration measures do not capture.
How leaders can use it
The report is an advocacy document and relies largely on Kaufman Hall’s own analysis, so expect regulators and payers to push back. Still, its framework mirrors the questions a board should be able to answer before announcing any combination:
- Who are our patients? Describe the deal’s effect on Medicare, Medicaid and uninsured patients, not just commercial members.
- What improves? Name the specific services, quality gains and capital projects the partnership makes possible, with timelines.
- What if it fails? Model a stand-alone path, including service cuts, liquidity and capital needs, and keep that analysis current.
- Where do we overlap? Map service lines with the partner to show where offerings complement rather than compete.
Documenting these points early builds the record regulators, state officials and communities will ask for.
Archive entry for Sep 14, 2026, added Nov. 11, 2026.