Expect more hospital mergers across the country, some with unlikely partners, Moody's Investors Service report predicts

Reflecting several hospital mergers that have already taken place in Kentucky, a new report from Moody's Investors Service predicts hospitals will continue to band together across the country as they respond to changes in health care.

"The difficult business environment and the changes expected in how hospitals will be paid for delivering care are driving many smaller, stand-alone hospital groups into the arms of larger and better-financed organizations," reports Reed Abelson for The New York Times.

Hospitals have long looked for partners to become larger in order to have more negotiating power to ask for higher payments from insurers. But now they are looking at ways to become more efficient too as they expect lower reimbursements from Medicare because of federal health-care reform. That means more consolidation, Moody's says.

While there are traditional mergers in play, there are also more atypical alliances forming. One of the nation's largest nonprofit hospital groups, North Shore-LIJ Health System, will join with Hackensack University Health Network in New Jersey, for example. There are instances of for-profit hospital groups joining with private equity firms. Health insurance companies could even become buyers, and hospitals and doctors could join forces "so they can be more of a one-stop shop," Abelson reports.

As a result, patients will ultimately have fewer hospitals from which to choose, but some small, stand-alone hospitals, especially in rural areas, will still exist. "We're not going to predict the small independent hospitals will all shutter and close," said Lisa Goldstein, one of the authors of the report. (Read more)