Rural groups opt for change
Hospital mergers could lead to higher prices for patients.
Yampa Valley Medical Center in Steamboat Springs has stood for 71 years as an independent bastion of health care in its bucolic mountain community.
“We’ve done very, very well here from a standpoint of quality of care,” its CEO, Frank May, said.
But Yampa Valley won’t make it to 72 years on its own.
The 39-bed hospital announced last month that it is merging with Colorado hospital heavyweight UCHealth, which already encompasses seven other hospitals and more than 1,600 patient beds in the state. In doing so, Yampa Valley has become the latest rural hospital in Colorado to be gobbled up by growing Front Range health care systems — a voracious process that analysts say is saving some of Colorado’s most vulnerable hospitals but could also lead to higher prices for patients.
The force driving the trend is simple economics, said Allan Baumgarten, a Minneapolis-based consultant who produces reports on the business of hospitals. As smaller, rural hospitals labor under the weight of ever-more sophisticated technology demands, larger hospitals are looking to spread the investments they’re making into those areas across greater numbers of patients.
As a result, what used to be thought of as local health networks have expanded to cover increasingly broad swaths of the state. And it’s not just in Colorado where this is happening.
“It’s a trend that’s been in motion for more than a decade, at least in certain states,” Baumgarten said. He added: “The notion of what your lo-
cal market is is really changing significantly.”
In Colorado, the last decade has seen a flurry of consolidation among hospitals.
UCHealth, known for its flagship University of Colorado Hospital in Aurora, added Memorial Hospital in Colorado Springs and Poudre Valley Hospital in Fort Collins to its quiver. SCL Health, which operates Denver’s Saint Joseph Hospital, scooped up Platte Valley Medical Center in Brighton.
Centura Health, owner of St. Anthony Hospital in Lakewood, has been particularly active in rural Colorado. The health system added Durango’s Mercy Regional Medical Center in 2011, bought a Frisco physicians’ group in 2015, and has also taken over management of Leadville’s St. Vincent Hospital, which would have likely closed without Centura’s intervention. The latter is often seen as a good example of consolidation helping to keep cash-strapped small-town hospitals viable.
“We want to keep health care local,” a Centura spokesman said at the time the St. Vincent deal was announced.
That, said Baumgarten, is the upside of mergers.
Small-town hospitals can find themselves in a Catch-22, he said. Because rural areas often have higher percentages of people on Medicaid and Medicare, the hospitals there may not make as much money as their big-city brethren. Because the hospitals are small, though, they struggle to attract the specialists and buy the hightech equipment that could lead to greater revenue.
“Rural hospital leadership really has a lot of competing things they have to worry about,” said Tiffany Radcliff, a professor at the University of Colorado’s School of Medicine who studies health economics.
The mergers, though, may bring new worries for patients. Radcliff pointed to a study last year of hospital mergers in the same state but different local markets. Following the mergers, health care prices increased 6 to 10 percent, according to the study.
“It seemed like the cost increases may have been due to a little bit of market power,” she said.
May, the Yampa Valley CEO, said his hospital’s merger with UCHealth isn’t about making more money but about providing better care.
Prior to the merger, the hospital had to shift nurses out of clinical care and into administrative roles to keep up with paperwork. It also had to send patients down to Denver when they needed specialty care — such as in neurology — that the hospital couldn’t provide. Joining with UCHealth means Yampa Valley will have administrative help, and it also means that specialists from UCHealth will travel to Yampa Valley a few days a week to see patients in Steamboat Springs.
“I do have to acknowledge that sustainability for the future was part of the conversation,” May said.
But the thing he’s most excited about?
“We really have an infrastructure,” he said, “that is going to get us into the future and provide patients with as high-quality care as possible.”