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The Big Story: New study finds consolidation lowered mortality in rural hospitals

“Rural hospitals that merged with or were acquired into larger health systems are associated with greater reductions in mortality for conditions like heart failure, stroke and pneumonia compared to facilities that remained independent, according to a new study.

What it Means for Your Health System

(2-minute read, 13-minute podcast)

Some good news for those trying to make the case in favor of rural hospital M&A. For too long, insurance companies, policymakers and some parts of the media have been filling the “cons” column with negative consequences – real, alleged and everything in-between – of rural providers joining up with former competitors and larger systems alike. Now, this study, published in one of the reputable journals within the JAMA constellation, offers a solid datapoint for the “pro” column.

We’ve been encouraging providers pursuing partnerships to tell their story by explaining the value that partnership will create. We’ve also advocated for finding data that can undergird those arguments. And so for many reasons it was encouraging to see lives saved – mortality from heart attacks was cut nearly in half following an acquisition, mortality due to stroke decreased by about a third.

Whether your organization is looking to acquire, be acquired or simply help change the narrative around consolidation, add this study to your stack of materials. Here are some considerations as you do.

Be motivated. Nothing in the data guarantees an outcome, but rather shows what’s possible. That possibility can serve as a goal for everyone involved. “They cut mortality by half? It can be done – and let’s take it further!” It’s a way to connect back to your mission and give your people hope through the promise of making healthcare better.

Learn from the results. Use the overall data as the impetus to look at how other providers have succeeded. It’s the action to follow the motivation. That means spending time to reverse engineer the improved outcomes following an acquisition, then working to apply and explain those lessons for your specific situation. Who knows? Even hospitals who aren’t in the middle of a deal might find some valuable ideas.

Go on offense. A risk with positive data such is that it can become fetishized, something that advocates for a deal instinctively point to every time criticism comes their way. Don’t give in to the temptation. For one thing, you run the risk of muddying the waters by getting into a tit-for-tat argument. “They showed that costs went up? Well, we showed that mortality went down!” Technically accurate, maybe, but not helpful. In addition, if you use data defensively you are, by definition, reacting to the opposition. Instead, be positive and proactive by using the numbers to explain why you’re moving towards a deal and what you plan to accomplish.

Don’t expect a magic bullet. First, what does it tell us? That done well, a merger or acquisition can lead to meaningful improvements. What does it not tell us? That a partnership will lead to meaningful improvement. Be very careful to not overstate results. Getting to better outcomes will take a lot more than just partnering up and letting things run their course. It’s years of careful, mission-driven work to get the desired outcome.

Be patient. The Modern Healthcare article about the paper noted that many of the improvements “were not seen until after three to five years post-merger.” That’s a tough pill to swallow in an instant-gratification society, especially for something as acute and personal as medical care. As you proceed through a deal, it’s critical to set expectations about what is and isn’t possible, including when people can reasonably expect to see the results. But at the same time, explain to people the meaningful benchmarks along the way so they can track your progress towards the goal.

Rural hospitals are struggling and need a path forward. Recognizing those difficulties and mapping the way is the impetus for groups like Rural Healthcare Initiative. Here we have a bit of light, showing that there is a way to improve care for these communities through strong relationships. It takes time and energy to find that right partner, but here we have strong, reliable data that it can be done.

Want to learn more about the study and what it means for rural M&A? Check out the 13-minute conversation with Jarrard Inc. Partner Isaac Squyres.

This piece was originally published over the weekend in our Sunday Quick Think newsletter. Fill out the form to get that in your inbox every week.