Terre Haute hospital merger would raise prices, lower wages, analysis shows
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A new analysis from Yale University says the proposed merger of Union Health and Terre Haute Regional Hospital would result in an increase in health care prices and insurance premiums, in addition to lower wages for nurses.
Zack Cooper, an associate professor of public health and associate professor of economics at Yale, said the merger does not address consumer concerns.
Cooper presented his findings this month to the Indiana Department of Health as part of a public comment period related to the Certificate of Public Advantage (COPA) application filed by the two hospitals ins February.
In the analysis, Cooper said if the merger is approved, commercial health care prices would increase by 10%-30%, while local insurance premiums would rise 3%-10%.
In its COPA application, Union Health and Terre Haute Regional Hospital said they would introduce price commitments designed to protect patients from potential price increases generated by the merger. However, Cooper said those commitments are unlikely to protect consumers.
“First, they generally apply to billed charges, which are not the basis for the majority of payments made by patients or insurers,” he said. “Second, the pricing commitments only apply for a period of seven years (or five if Parties voluntarily terminate the COPA when the period of state supervision expires).”
Cooper added his belief that the merger would not increase competition in the area.
“Approximately 80% of the patients who currently receive care at Terre Haute Regional Hospital are predicted to receive care at one of Union Health’s hospitals if the parties merge. That is, because Terre Haute Regional Hospital’s existing patients would still receive care locally, this transaction lessens competition; it does not increase it.”
The analysis also notes that the wages of nurses would decrease by 5% if the merger goes through, saying “when hospitals gain market power, they also gain the ability to negotiate lower wages with workers.”
Cooper said the merger could result in the loss of about 500 local jobs outside of the health care sector, affecting workers who get their health insurance from an employer.
“When the price of hospital care goes up, it raises insurance premiums,” Cooper said. “In the presence of employer-sponsored health insurance, this increase makes it more costly for non-health care firms to retain workers.”
Union Health did not respond to a message seeking comment from Inside INdiana Business on Wednesday.
The two hospitals originally announced plans to merge in September 2023. A year later, the Federal Trade Commission urged the IDOH to deny the hospitals’ first COPA application, saying it could shield the proposed merger from antitrust scrutiny, leading to a deal that would likely impose higher costs and could lead to worse health care outcomes for Indiana patients, as well as lower wage growth for hospital workers.
Union Health withdrew the first COPA application in November, but said the hospitals would continue to work toward completing the merger. A new COPA application was filed on Feb. 5.
The FTC reaffirmed its opposition to the merger earlier this month, saying the “second attempt to merge under a proposed certificate of public advantage…presents the same anticompetitive harms as their original application did.”
The Indiana General Assembly approved a bill in 2021 that made Indiana one of 19 states with COPA laws, which allow hospital mergers that the Federal Trade Commission otherwise considers illegal because they reduce competition and often create monopolies.
One of the key architects of that bill, Sen. Ed Charbonneau, R-Valparaiso, is now working to undo the 2021 in the current legislative session.
Charbonneau is the co-author of Senate Bill 119, which would prohibit COPA applications after Feb. 15, 2025. That bill was unanimously passed by the Senate and has been referred to the House Public Health Committee.
The state has until Aug. 13 to decide whether to approve the COPA certificate for the merger of Union Health and Terre Haute Regional Hospital.