The United States is on the brink of a hospital capacity crisis. It has fewer than 1 million hospital beds nationally, far below the predictions of what will be needed to treat those who become seriously ill during the novel coronavirus outbreak. There are many reasons the U.S. health-care system is so ill-equipped to handle a crisis of this magnitude. One of them is the decades-long trend of hospital mergers and closures that have reduced access to care in communities across the nation.
According to data from the Centers for Disease Control and Prevention, when the rush of patients sick from covid-19 peaks this month, the United States will need about 15,800 more hospital beds than are currently available. Some communities will be hit much harder than others. Massachusetts, for example, could be more than 3,180 beds short. Intensive care units, in particular, are in short supply. More than half of U.S. counties are facing this crisis with no ICU beds at all, while others have nowhere near what will be needed. Dakota County, in the Minneapolis suburbs, has just 12 ICU beds. More than 75,000 residents there are over 60.
America’s now-disastrous lack of hospital capacity is no accident. It is, in part, a result of consolidation over the past 30 years that concentrated our health-care system in wealthy cities and suburbs, where the prevalence of expensive insurance plans allowed big health systems to rake in profits. There have been more than 680 hospital mergers over the past decade, a trend that is likely to accelerate in the coming years. It involves mergers between hospital systems, as well as large hospital conglomerates’ takeovers of rural hospitals, physician offices, ambulatory surgical centers and other outpatient clinics.
Under a Clinton-era rule, the Federal Trade Commission, which since the mid-1970s has been in charge of policing the health-care industry, will not challenge a merger in which either of the hospital groups has fewer than 100 beds, sidelining the agency when big hospital groups snap up smaller rural facilities. Edith Ramirez, the head of the FTC during the Obama administration, said the agency challenged just 1 percent of all hospital deals.
The wave of takeovers the FTC oversaw has contributed to the loss of rural hospitals and a decline in the number of beds across the country. Today, there are about 15 percent fewer community hospitals in the United States than in the mid-1970s; since 2010, about a dozen merged rural hospitals have shuttered. The impact of hospital consolidation is particularly painful in the context of the pandemic: Mergers and closures have contributed to the reduction in hospital beds in the United States, from around 1.5 million in 1975 to just more than 900,000 in 2017.
Further exacerbating the effects of these mergers, at least 120 rural hospitals have shuttered over the past decade. The loss of providers is a result of a number of factors, including shrinking populations in rural areas. But consolidation has played a part. The Affordable Care Act increased the pace of consolidation, and the hospital industry is now highly concentrated in 90 percent of all U.S. cities, according to a Commonwealth Fund study. These mergers and rural closures have moved decision-making further and further away from the communities most affected.
Rural hospitals in particular have struggled for myriad reasons, including the decision of many Southern and Midwestern states to not expand Medicaid under the Affordable Care Act. In fact, none of the six states with the greatest number of hospital closures since 2010 (Texas, Tennessee, Georgia, Alabama, Mississippi and North Carolina) expanded Medicaid, resulting in a health landscape where patients are in worse health and have fewer providers to treat them.
Recent studies have shown that even before covid-19 began to strain rural health systems, 1 out of every 5 rural hospitals was at risk of closing because of financial pressure. Part of this pressure comes from sicker patient populations that are more likely to rely on Medicare or Medicaid, which have lower reimbursement rates than private insurance does. That has made for an underlying health crisis upon which the covid-19 pandemic is now layered. If hospitals had not undergone such sweeping consolidation over the past decades, our health-care system probably would be better equipped for the outbreak now. “It is definitely a piece of the overall puzzle,” says Dunc Williams, who researched rural hospital mergers and closures at the University of North Carolina at Chapel Hill.
This trend is just one example of the increase in corporate power that has characterized the economy over the past few decades. It has also hurt patient care and driven up patient and insurer costs — which means more cash for already-wealthy hospital conglomerates and the executives who run them.
The latest hospital merger wave has been fueledby the financial sector’s influence in the health sector. Investors have pressured hospitals to cut costs, buy their rivals and then raise profits by imposing a largely outpatient health-care model. Outpatient hospital prices have grown four times faster than what doctors charge — a trend that has both reduced beds and propelled hospitals’ frenzied takeover of independent physician groups. Between 2016 and 2018, hospitals acquired more than 8,000 doctors groups.
The immediate answer to our bed shortage is unclear. Navy hospital ships have arrived in New York and Los Angeles, each with 1,000 beds, as hospitals quickly fill with coronavirus patients. There has been some discussion of enlisting the military to rapidly build hospitals. The National Guard and the U.S. Army Corps of Engineers have transformed New York City’s Javits Center into a 1,200-bed hospital.
The challenge for policymakers is to meet these short-term needs while also ensuring that the country never again finds itself with more sick and dying patients than our hospitals can treat. The FTC must take hospital mergers more seriously, reviewing proposals carefully while prioritizing patients and the stability of our health-care system as a whole.
A broader lesson from this moment is that public health is — as most other countries in the world believe — a public good, and public goods require broad public investments. Hospitals should not be run according to corporate-style efficiencies, operating at near-full capacity to satisfy investors. Rather, hospitals should ensure that they have the capacity to care for their communities should the worst occur.
This article has been updated.