Health System Consolidation: Healthcare Employee Impact
Over the past few years, health system consolidation has become a big trend in the U.S. Hospitals and healthcare systems are merging and forming partnerships to streamline operations, cut costs, and deliver better patient care. While that might sound like a win-win, there’s a lot more to consider—especially when it comes to how these mergers affect roles, and ultimately, healthcare recruitment efforts.
Mergers started leading to consolidation even before hospitals experienced the stresses Covid-19 put on their finances. In the 12 years from 2005 to 2017, the portion of hospitals that form part of larger systems increased from one-half to two-thirds. Last year, consolidation was especially active. Across 22 states over 34 bills were enacted relating to health system consolidation and competition. The impact of consolidation reaches far beyond the balance sheets. It changes the day-to-day work of clinicians, shifts workplace culture, and plays a huge role in shaping the future of healthcare jobs. We’ll explore how hospital mergers impact healthcare employees, the clinician workload, and what the future of healthcare staffing might look like.
What’s Driving Health System Consolidation?
Earlier this year, the Association of American Medical Colleges (AAMC) published research on the current state of health system consolidation. They found that the largest health systems in the U.S. command a combined average of over 40% of the market in each state. Furthermore, the top three large-group insurers hold an average of over 80% of the market share in each state. Health system consolidation often happens for a combination of reasons.
Improving Efficiency and Reducing Costs
Some health systems use mergers to keep financially struggling hospitals open by averting bankruptcy or closure. Mergers allow hospitals to pool their resources, negotiate better deals with suppliers, and streamline administrative functions. This leads to reduced costs, which is especially important for smaller hospitals facing financial challenges.
Enhancing Patient Care with Increased Services
By consolidating, healthcare systems can provide patients with access to more specialized care, innovative treatments, and state-of-the-art technology. Post-acquisition data show that nearly 40 percent of hospitals newly affiliated with a consolidated health system added at least one additional service. Large systems can also standardize care protocols, potentially improving patient outcomes.
Navigating Financial Pressures
The financial pressures on hospitals, including reimbursement cuts and increasing costs, make consolidation a strategic option for long-term sustainability.
What’s the Healthcare Employee Impact of Consolidation?
While consolidation might seem daunting, there are several advantages for employees within these larger systems. The American Hospital Association (AHA) is all in on consolidation. They believe it can help improve access to care by expanding the types of services and specialists available to patients, while offering broader opportunities to practitioners.
Access to Better Resources
When hospitals merge, they typically invest in cutting-edge technology, continuing education, and professional development. This means employees have more opportunities to enhance their skills and improve patient care.
Job Security
Merging with a larger, financially stable system often leads to greater job security for healthcare employees. Larger systems are less likely to face closures, layoffs, or severe budget cuts, even in tough economic times.
Healthcare Job Market
In consolidated systems, employees have access to more diverse career opportunities, with the ability to transfer between facilities or advance within the organization. This offers more pathways for professional growth.
Competitive Pay and Benefits
Larger systems tend to offer higher wages, better benefits, and perks like loan repayment assistance or signing bonuses. Studies show that employees in merged health systems often enjoy better compensation compared to those in independent hospitals.
What Are Potential Downsides of Health System Consolidation for Clinicians?
While there are positives, the flip side is that these mergers can create significant changes for the workforce, particularly those who are already stretched thin due to healthcare worker shortages.
Clinician workload
When administrative and support staff are reduced due to consolidation, clinicians often have to take on additional responsibilities, leading to higher workloads. More patients, more paperwork, and fewer hands to help can contribute to burnout.
Job Redundancies
To save costs, merged hospitals often eliminate duplicate administrative roles or middle management positions. This can lead to job redundancies, particularly in non-clinical areas, creating uncertainty and anxiety among staff.
How Can Hospital Mergers Impact Healthcare Workplace Culture?
Hospital mergers often cause significant shifts in the workplace culture with potential impacts on employees.
Changes in Decision-Making
Smaller hospitals often have more local, community-driven cultures. When they merge with larger systems, decision-making becomes more centralized, and employees may feel disconnected from leadership.
Loss of Flexibility
Larger systems tend to standardize processes across multiple facilities. While this can improve efficiency, it often reduces flexibility, making it harder for staff to tailor procedures to their specific work environments.
How Does Consolidation Affect the Healthcare Job Market?
The broader healthcare job market is also impacted by consolidation. Here’s what it means for both job seekers and those already working in healthcare.
More Recruitment Power for Large Systems
Larger health systems can also offer more competitive salaries and benefits, making them more appealing to potential employees.
Challenges for Smaller Hospitals
Smaller, independent hospitals struggle to compete with the larger systems when it comes to offering competitive compensation. This makes it harder for them to recruit and retain qualified staff, especially in areas where health system consolidation is widespread.
Impact on Rural Healthcare
Research on consolidation’s impact In rural areas, when larger systems acquire smaller hospitals, those facilities may close or downsize, reducing both healthcare access for patients and job opportunities for healthcare workers. This exacerbates the already-existing healthcare worker shortages in these regions.
What Is the Future of Healthcare Staffing in Consolidated Systems?
Looking ahead, the future of healthcare staffing will likely be shaped by technological advancements in healthcare and a need for new skill sets.
Embracing Technology
As large health systems invest in telemedicine, artificial intelligence, and data-driven care, employees will need to become more technologically proficient. This could open up new roles, such as telehealth coordinators and data analysts, but may also render some traditional jobs obsolete.
Upskilling and Adaptability
To remain competitive in a consolidated healthcare environment, healthcare workers will need to continually upskill. Certifications in telehealth, data management, and other technological innovations will become essential for long-term career success.