Health-Care Overhaul: Risk, Opportunity for Mid-State Companies

Aug 1, 2013


MURFREESBORO, Tenn. (AP/WMOT)  --  On Tuesday, Franklin based hospital giant Community Health Systems announced plans to buy fellow hospital operator Health Management Associates for about $3.9 billion.

The deal will make CHS the largest hospital company in the nation in terms of the number of hospitals it operates. CHS says it’s making the purchase to put itself in a better position to benefit from President Obama’s health care overhaul.

Health care industry veteran Larry Scanlon has lectured and written extensively on large hospital mergers. He says Obama Care is a two-edged sword for hospitals.

On one hand, more patients will be covered by insurance. But there will also be added risk as hospitals are held more accountable for patient outcomes.

“If you do a good job, we’ll reward you. If you don’t do a good job we’ll punish you financially. So that’s one of the ways that hospitals are looking to improve their position is by merging with other hospital providers, because you need scale to be able to spread that risk. It’s just like you or I buying home insurance or automobile insurance.”

Scanlon says it’s a testament to Middle Tennessee’s entrepreneurial spirit that the area is home to so many large and growing hospital corporations.