Examining a Legal Issue

Running Head: HEALTHCARE 1

HEALTHCARE 2

Hospital Mergers and Acquisitions

Joseph Toole

Public Health Policy Research

29 Oct 2016

Identify a legal issue confronting a healthcare policy from your state. Briefly describe the legal issue.

One of the legal issues that would affect the healthcare sector within the United States involves the hospital's mergers. The ever changing market, as well as business environment, has continued to force hospitals to enter into mergers without considering or adhering to all the set rules and regulation on mergers. Hospitals are obliged to merge due to various reasons. One of the goals that hospitals aim while establishing a merger the assumption that they are well placed financially when operating as one compared to operating individually (Feinstein, 2011). Other reason for embracing merger include, increased the need to lower the operation cost. In the modern society majority of the health care institutions are finding it hard to realize the set goals as well as remaining profitable.

Like other business are struggling, health care sector is not spared. Uncertain revenue flow has continued to halt hospital business while the certain operation costs have continued to increase every day. Over the past decades, hospitals were focusing more on efficient management and paying least attention or no attention on ways to maintain the operation costs as low as possible to ensure increased profitability (Feinstein, 2011). The unpredictable business environment has made revenue management a very complex task that if gotten wrong, many of business and hospitals are forced to close down or enter into a merger. The merger is seen as the only positive alternative by hospitals to ensure reduced burden on the scarce resources. Also, there is a general perception that mergers would help to reduce or control the operational costs effectively.

Need to share cost involved in acquired or stabling new and modern health care facility and technology is another reason why hospitals from mergers. The cost associated with new technology and modern infrastructure is huge. Thus the objective can only be achieved through partnerships such as mergers. The merger also results in increased bargaining power or net creditworthiness of the hospitals thus increasing their chances of securing loans from financial institutions to procure new technology or health care infrastructure.

The urge to increase the business market share or overcome competition is another force that is forcing hospitals to enter into mergers. Increased access to more markets is an essential strategy embraced used by organizations to enjoy increased revenue generated as well as the tax gains (Davis, 2012).

Currently, the United States does not have a laws policy within the health care sector that oversees the process of hospital mergers or any other healthcare institutions merger. Hospital mergers fall under the Federal Acts concerning business mergers. There has been shifting the trend of market forces instead need for improved efficiency is making hospitals enter into mergers.

Describe the healthcare laws violated as a result of this legal issue.

Antitrust laws within the healthcare sector have continued to be violated by a continued and ever increasing hospital or other healthcare organizations mergers. A good example, in this case, involves an antitrust lawsuit against the move by Toledo-Based ProMedica Health Systems that merged with St. Luke Hospital. The merger was challenged due to fears that it was a plan to reduce competition in the market thus allowing room to increase prices for the healthcare systems (Feinstein, 2011). Healthcare organizations and hospitals are furthering their merge agenda violating various antitrust laws thus creating a harsh business environment for others within the sector.

Current debate on this issue

The current issue on increased hospital mergers has continued to spark debate among different stakeholders on what need to be done. Some of the players argue that the merger trend as a strategy to force some of the organizations as well as hospitals out of the market so as giant hospitals and other organization to continue dominance. The other issue of concern involves treating health care organizations similar to any other business. Although some of the challenges facing healthcare organizations are similar to any other organization regardless of the sector, some people have the feeling that healthcare organizations merger should be treated and evaluated using different approach and parameters.

Stakeholders

The continued debate has compelled the legislatures, medical personnel, and other healthcare stakeholders to convene various meeting aimed at discussing the state's capability to respond in the best way up if there is an outbreak. The role of the stakeholders is to develop and various policies that would make the United States safe from infectious diseases. The legislature ensures that the proper laws are designed to protect the nation population.

Policy process

Currently, healthcare organizations or hospitals are only required by law to provide reasons basing their resolve for the merger. The process further required adhere ring to all the set antitrust laws (Feinstein, 2011). Federal laws expect that the process is handled in the fairest way possible but the trend changed long time ago because of various reasons well known by those involved.

The process should be all inclusive. The healthcare organizations merger should be treated as a special case that requires a lot of attention so as to avoid creating unhealthy competition or domination resulting to poor healthcare services as well as low-quality healthcare products. The stakeholders should also focus on establishing a policy to govern the mergers of healthcare organizations alone. All the provided reasons for a merger should be evaluated to establish their validity as well as their effect to other organization within the healthcare sector. The policy should avoid all the reasons that would result in a monopoly or reduced competition.

References

Davis, D. (2012). M&A integration--how to do it: Planning and delivering M&A integration for business success. Hoboken, N.J: Wiley.

Feinstein, R. A. (2011). Antitrust laws and their effects on healthcare providers, insurers and patients: hearing before the Subcommittee on Courts and Competition Policy of the Committee on the Judiciary, House of Representatives, One Hundred Eleventh Congress, second session, D. Washington: U.S. G.P.O.