Price increases? Job losses? How will UAB’s acquisition of St. Vincent’s impact local health care?

The University of Alabama at Birmingham (UAB) has undertaken a significant move in the local healthcare landscape by acquiring Ascension/St. Vincent’s operations and properties in Central Alabama for a whopping $450 million. This sizable deal is expected to have far-reaching consequences for not just Birmingham, but the entire state of Alabama.

Implications for Local Health Care

Being the largest public employer in Alabama, UAB operates the state’s largest hospital and numerous other health care facilities like the Kirklin Clinic and the Callahan Eye Foundation Hospital, serving a substantial portion of the state. However, with Ascension, having the 11^th and 14^th largest hospitals and three other area hospitals in its operations, this merger could have significant implications for healthcare consumers and employees in the region.

The Potential Pitfalls

Elena Andreyeva, an economist teaching health policy and management at Texas A&M University, raises concerns about increased healthcare costs due to larger health systems having fewer competitors. Andreyeva’s upcoming study indicates that prices could increase by up to six percent following such acquisitions. Labor costs, which form nearly half of a hospital’s operating budget, may also see cuts following mergers, leading to layoffs, especially in administrative positions, to reduce redundancies.

The Ripple Effect

Co-researcher Benjamin Ukert agrees with Andreyeva’s findings, stating that healthcare costs often increase after big acquisitions. This could lead to higher health insurance premiums and increased cost of doing business for employers.
However, UAB officials have responded by stating their intent to sustain patients’ access to quality healthcare and do not anticipate increased costs. They also hope to avoid layoffs, aiming to keep most of St. Vincent’s more than 5000 employees.

Optimism amidst Concerns

While the predictions made by Andreyeva and Ukert sound grim, some see the acquisition as a positive development for Birmingham and central Alabama. Dr. Don Williamson, President of the Alabama Hospital Association, views the UAB’s acquisition of St. Vincent’s properties as a strategy to stabilize access to care and the health system in central Alabama. He also observes that Ascension’s recent years of operating losses would have made this move a rational one.

However, the acquisition must still be approved by regulators and the Catholic Church, which owns Ascension/St. Vincent’s. The covid-19 pandemic has shown the vital role played by healthcare providers, and this acquisition only highlights the importance of a robust healthcare system for any community.

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