A Big Merger Doesn’t Mean A Big Healthcare System Wants In On Rural Health

Sep 4, 2018


  As Mission Health announced its sale to HCA for $1.5 billion dollars, Western North Carolina’s other major hospital system, Duke LifePoint, is going through its own merger. For-profit Duke LifePoint is moving forward in a merger with much larger for-profit healthcare system RCCH Healthcare.

 

Here’s what we know so far: Both Duke LifePoint and RCCH Healthcare are owned by even larger organizations. RCCH Healthcare is owned by private equity company Apollo Management Group which manages almost $250 billion dollars worldwide. Duke LifePoint represents 15 hospitals – including 8 in Western North Carolina.  Those are a part of a LifePoint deal with Duke University. Overall LifePoint Health owns 71 hospitals across 22 states.

 

That means LifePoint’s 8 Western North Carolina hospitals, which are crucial to healthcare access in the region, are a tiny sliver of this massive merger.

 

The North Carolina Rural Health Research Program recently released a report showing the number of rural hospital closures and mergers have gone down between 2005 through 2016.

 

“One armchair hypothesis is that all of the hospitals that closed in 2010 to 2015, they were the ones that were in the intensive care unit,” says Dr. George Pink, who worked on the report. He explains that those hospitals were in the greatest need of capital therefore, they closed deals quickly. The hospitals that haven’t closed or been acquired at this point are more stable but this doesn’t mean that they are moneymakers.

 

Pink says that rural hospitals are risky investments but are often so small that they don’t factor into the overall profitability of a merger with a big healthcare system.

 

“There are a lot of rural hospitals over 200,200 of them but when you add up all their spending  they account for less than 10% of Medicaid spending,” says Pink.

 

Pink stated that it is not common for a healthcare system to go through multiple mergers.

 

After LifePoint finalizes its deal with RCCH Healthcare, the new combined company called LifePoint Health has a projected annual revenue of over $8 billion dollars. The deal is expected to go through in the next several months.