Oregon Launches Health System Consolidation Oversight Program
On March 1, the State of Oregon launched a new Health Care Market Oversight (HCMO) program to review business deals that consolidate the health system in a way that could impacts, costs, quality, access and equity for Oregonians.
In 2021, the Oregon Legislature passed House Bill 2362, giving the Oregon Health Authority (OHA) the responsibility to weigh in when two healthcare entities that meet certain criteria propose to merge, acquire, or affiliate their businesses.
Through the new program, local communities and the state will review proposed business deals to make sure they will help – and not hurt – Oregon's shared goals of health equity, lower consumer costs, increased access, and better care.
OHA pointed to both national and regional examples of how consolidation is increasingly common across the U.S., resulting in healthcare markets with fewer small or independent providers and more large, national companies. Between 2010 and 2017, there were 778 hospital mergers in the United States. In 2014, 24 percent of physician practices were owned by hospitals and health systems; by 2018, it had increased to 46 percent.
Here are some examples from Oregon:
• Most physicians in the Portland metro area work for health systems. In 2016, 39 percent of Portland metro physicians worked for health systems. In 2018, 71 percent worked for health systems.
• In 2003, 43 percent of Oregon’s hospitals were independent; by 2020, 25 percent were independent.
“OHA is pleased to launch this important program, which will provide the community an opportunity to learn about and weigh in on large mergers and acquisitions in the health care sector,” said Jeremy Vandehey, director of the Health Policy and Analytics Division at OHA, in a statement. “This will increase transparency around proposed transactions that could significantly change the health system in a local community. As we see increased healthcare industry consolidation nationwide, it’s deeply important that we make sure that improving health care for consumers and community is at the center of health care market transactions, not an afterthought.”
Understanding the potential impacts of a proposed transaction is not the only goal of the HCMO program, OHA said. It also aims to:
• Promote transparency: OHA will track and publicly post notices when healthcare transactions occur. Communities will know about planned transactions and will have the ability to voice their perspective as part of the review process.
• Support statewide priorities: Ensure that healthcare consolidation in Oregon supports statewide goals related to lower costs, greater health equity, increased access, and better quality.
• Monitor impacts: OHA will analyze the type, number, and frequency of transactions, and evaluate how transactions impact people in Oregon. OHA will produce statewide reports related to the impacts of healthcare consolidation.
“Although some other states review proposed transactions, OHA and the HCMO program are the first in the nation to begin to tackle this issue in a systematic and meaningful way and with a focus on health equity,” added Vandehey. “We look forward to continuing to understand the contours of these transactions and what their effect might be on our healthcare delivery system. The Legislature was careful to note that people in Oregon want safe, affordable, high-quality care delivered in an equitable manner in their community. We will be making sure that future transactions adhere to this vision.”
Not surprisingly, the Oregon Association of Hospitals and Health Systems has raised concerns about the program. In a February letter to OHA, Andi Easton, vice president of government affairs, wrote that “the process is not providing adequate opportunity for engagement with impacted parties to ensure that the HCMO Program is operationalized in a functional manner. We continue to sound the alarm that the Health Care Market Oversight Program is not ready for implementation, and we encourage a delay of the March 1 rollout. The volume and density of the draft guidance documents illustrate the incredible complexity of this Program, and it is critical that we take the necessary time to operationalize it in a manner that will not disrupt important collaboration across our health system and the delivery of care in our communities. Any other course of action would be irresponsible to Oregonians.”
