TERRE HAUTE, Ind. Locals in this city of 58,000 are used to having to wait at railroad crossings for one of the dozens of daily cargo trains to pass through.
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But a proposed merger between the two hospitals on either side of the city could exacerbate the problem in emergencies if the hospitals shut down some services, such as trauma care, at one site, which the proposal cites as a possibility. Tom High, fire chief of a nearby township, said some first responders would be forced to transport critical patients farther, risking longer delays, if they become what locals call railroaded by a passing train.
Thats just one of the fears in this community as Indiana officials review whether to allow Union Hospital, licensed as a 341-bed facility, to purchase the countys only other acute care hospital, the 278-bed Terre Haute Regional Hospital. The proposed deal also raises concerns about reduced tax revenue, worsening care, and higher prices. Email Sign-Up
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Within the next few months, the Indiana Department of Health must find clear evidence that the proposed merger would improve health outcomes, access, and the quality of care. Those benefits must outweigh any potential disadvantages.
As the nations health care industry has become more concentrated amid a steady clip of mergers in recent decades, its common for one large system to dominate a market. In this case, the deal would be Indianas first merger under the COPA law, short for Certificate of Public Advantage, that the state enacted in 2021. Such laws allow deals that the Federal Trade Commission otherwise considers illegal because they reduce competition and often create monopolies. To mitigate the negative effects of a monopoly, the merged hospitals typically agree to conditions imposed by state regulators.
Union Hospital leaders said its time to move beyond competition for the sake of the region, which has struggled to keep jobs and raise life expectancy rates. Hospital spokesperson Neil Garrison said the merger would ultimately improve care, increase access, and cut costs. Leaders of Regional Hospital, which is owned by for-profit chain HCA Healthcare, did not respond to questions about the proposal.
One unusual implication arises, though: If the merger is approved, the surrounding county would lose tax revenue from one of its larger businesses. Union Hospital, which as a nonprofit is exempt from paying taxes, would be acquiring tax-paying Terre Haute Regional, which paid roughly $508,000 in county taxes for 2023, said Vigo County Auditor Jim Bramble. Thats the equivalent of the starting salaries of about nine sheriffs deputies, per the countys $83 million 2024 budget.
Garrison said the hospital system is aware of the tax implications for the county and is exploring opportunities to address it. Indiana regulators are weighing whether to allow rival hospitals to merge in Terre Haute. The deal would be Indianas first merger under the COPA law, short for Certificate of Public Advantage, that the state enacted in 2021. (Samantha Liss/KFF Health News)
Meanwhile, Roland Kohr, formerly a pathologist at Regional and a county coroner, frets about erasing competition that forced the hospitals to add services or match the other. The push to introduce new technologies, to recruit more physicians, that may not happen, he said.
The FTC has urged states to avoid COPAs, pointing to research that found they have resulted in significant price increases and contributed to declines in quality of care. The fallout of similar mergers has triggered federal sanctions in North Carolina and pushback from locals and legislators in Tennessee.
A merged hospital system that faces little remaining competition after the merger usually has little incentive to follow through with its promises because patients have no other choice, wrote Chris Garmon, a University of Missouri-Kansas City economist who has studied COPA mergers, in a warning to Indiana health officials about the proposed merger.
Indiana already has among the highest hospital prices in the country, according to a study by the Rand Corp. research organization. The Indiana Legislature spent the past year trying to rein in prices. Gloria Sachdev, CEO of Indianapolis-based Employers Forum of Indiana, which pushed for those pricing limits on behalf of frustrated business leaders, is worried a Union-Regional merger would undo those gains and raise prices further.
Indianas COPA restricts how much the hospital could increase charges, Garrison said. Brandon Sakbun was elected last year as Terre Hautes youngest mayor. He believes a merger between the surrounding countys only two acute care hospitals would benefit residents by turning around the regions abysmal public health statistics. (Samantha Liss/KFF Health News)
Elsewhere, the largest COPA-created hospital system in the country, Ballad Health, has reported that the time patients spend in its ERs in Virginia and Tennessee before being hospitalized has more than tripled, reaching nearly 11 hours, in the six years since that monopoly of 20 hospitals formed. Still, Tennessee has awarded Ballad top marks even when certain quality metrics, including its ER speed, fall below established benchmarks.
Ballad Health spokesperson Molly Luton said the systems performance has improved since those statistics were gathered.
Last fall, some Tennesseans unsuccessfully urged a county board to call on the state to better regulate the hospital system. This spring, state lawmakers refused to hear testimony from residents who drove five hours to Nashville to testify for a bill that sought to limit future COPA mergers in the state which ultimately didnt make it to a full vote.
Problems have also occurred when a COPA and its oversight are removed, leaving the merged hospital system as an unregulated monopoly. After North Carolina repealed its COPA in 2015, a subsidiary of HCA Healthcare bought Mission Health, a COPA-created monopoly in Asheville, for $1.5 billion in 2019. The monopoly in Asheville remained but none of the COPAs conditions applied to the new owner.
Last year, government inspectors found deficiencies at Mission Health that contributed to four patient deaths and posed an immediate jeopardy to patients health and safety, according to the 384-page federal inspection report. North Carolina Attorney General Joshua Stein sued HCAs subsidiary last year, alleging the ER was significantly degraded, and that the company failed to maintain certain critical services, including oncology care, a violation of a purchase agreement Steins office negotiated with it because the company acquired a nonprofit.
HCA said it promptly addressed the issues and denied Steins allegations in its legal response to the ongoing lawsuit, arguing it has expanded services since its purchase. HCA also argued that the agreement is silent about maintaining the quality of care. If Indiana regulators OK a merger between rival hospitals in Terre Haute, the surrounding county would lose tax revenue when nonprofit Union Hospital, which is tax-exempt, acquires Terre Haute Regional, a for-profit hospital owned by Nashville-based HCA Healthcare. (Samantha Liss/KFF Health News)
Back in Indiana, Union Hospital laid the groundwork for its merger more than three years ago when its leaders provided the language for COPA legislation to then-state Sen. Jon Ford, a Republican in Terre Haute, believing he would be the best champion for this proposal, according to legislative testimony from Taylor Hollenbeck, an RJL Solutions consultant on the merger. Ford, listed on the legislatures site as the bills co-author, did not respond to requests for comment.
Union CEO Steve Holman testified in the bills hearings that the countys public health rankings with an average life expectancy ranking 68th out of 92 counties in the state should be a call to action to do omething big and bold.
Terre Haute Mayor Brandon Sakbun agrees the merger could help what he called the countys abysmal public health statistics. Last year, he was elected the citys youngest mayor at age 27 on a promise to turn Terre Haute around. The regions workforce has steadily declined and local leaders have pinned their hopes on a new casino and a manufacturer of battery parts for electric vehicles to reverse this trend.
Sakbuns father is an OB-GYN at Union, but the mayor said that doesnt color his opinion and that he supports the hospital merger despite the loss of the tax base. He believes it will help recruit medical and other professionals to an area that has struggled to attract top talent.
Do I believe that this is the one that bucks the research? Sakbun said. I truthfully do.
KFF Health News correspondent Brett Kelman contributed to this article.
Samantha Liss: samanthal@kff.org, @samanthann Related Topics Public Health Rural Health States Hospitals Indiana North Carolina Tennessee Virginia Contact Us Submit a Story Tip
