Mergers, new facilities are area’s hospital trends

WASHINGTON (Map, News) - Competition is tight for hospitals in the Greater Washington area, according to a new report.

HealthLeaders InterStudy, in a recent review of the D.C. region, found hospitals battling for market share and, in some cases, consolidating in order to deal with competitive markets.

“Health systems, eager to gain an advantage in the growing suburbs of Virginia and Maryland, are busy constructing new facilities and completing mergers,” the report said.

Inova Health System has 20 percent of the market share in the area, according to the study, with MedStar Health retaining 12 percent and Adventist HealthCare with 8 percent.

Competition is the fiercest in Loudoun County because of high population growth, the report said, citing an ongoing regulatory battle over whether Hospital Corporation of America will be able to build a new medical center in Ashburn.

Mergers are pending or have been completed elsewhere in the area; the Federal Trade Commission is reviewing whether Prince William Hospital and Inova Health System will be able to merge. Last month, Montgomery General Hospital in Olney merged with

MedStar.

“From our perspective, we’re in a competitive market where the size of your organization can determine your ability to negotiate many things, whether it be managed-care contracts or purchasing agreements,” said Lynne Myers, vice president of corporate strategy and professional services for Montgomery General.

Hospital merger trends tend to ebb and flow depending on various factors in the industry, Myers said.

For example, there was a surge of merger activity in the early ’90s, which had waned until recently. Factors that drive the shifts include major events such as when major insurance companies are bought out by larger ones, she said.

Small hospitals also tend to more seriously consider a merger when they see a similarly sized hospital go through the process, she added.

The report found that Virginia hospitals on average are posting healthy profit margins, while Maryland and D.C. facilities are financial weaker but generally stable.

melissa.frederick@dcexaminer.com

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