In Hermann, Missouri, only 24 beds are available at the city’s critical access hospital. 

The hospital has been forced to whittle away at services over the years in order to stay financially viable. Like many of Missouri’s rural hospitals, the situation is dire, Hermann Area District Hospital CEO Bill Hellebusch said. 

To help keep the doors open, the hospital has an operating agreement with MU Health Care to staff and operate the building in Hermann. MU Health also places medical students in the Hermann facilities to help them get hands-on experience in rural settings. 

“We’re always going to try to maintain our independence,” Hellebusch said. “The reality is that all of us are just a heartbeat away from closure.” 

Now, Hellebusch is supporting a bill brought forward in Jefferson City that would grant antitrust immunity to MU Health Care and the University of Missouri’s Board of Curators to acquire or run hospitals, medical clinics or other healthcare facilities in a 25-county area throughout central Missouri. 

But critics of the legislation say antitrust immunity isn’t necessary for the kind of support MU Health Care says it wants to provide for rural hospitals and patients.

In most cases, experts say that if a rural hospital is in crisis, antitrust laws would not get in the way of a larger hospital system acquiring it because there is generally much less competition in rural markets. 

Instead, those experts are warning that the legislation could open the door for MU Health to make bids on its direct competitors in Boone and Cole counties, which would almost certainly trigger a deeper antitrust battle in mid-Missouri. 

Rural hospitals see acquisitions as a lifeline, but critics say bill goes too far  

As a rural hospital leader, Hellebusch said he needs every option on the table to continue providing care for patients in rural Missouri. 

When MU Health Care asked him to support the legislation in Jefferson City, he was eager to share why he believes the legislation is a good idea. 

“I am reading the tea leaves in the next five years. Whether any of us like it or not, we are going to see more hospital closures and mergers, period,” Hellebusch said. “As much as I love my independence, I love the hospital more and it being here for the community. I would never let a hospital close if there were another option that meant joining a system.” 

The legislation would allow the state to grant immunity from all state and federal antitrust laws to the University of Missouri’s governor-appointed Board of Curators to acquire other hospitals or clinics “regardless of the competitive consequences.” 

With only a few weeks left in the legislative session, the bill would need to clear several hurdles in the House and Senate to pass this year. 

But the bill’s sponsors want to start a conversation about future possibilities for MU Health Care as the state stares down what is expected to be a difficult time for healthcare providers as Medicaid cuts materialize. 

In a hearing before the Missouri House Special Committee on Rural Issues in February, MU Health Care CEO Ric Ransom told the committee that the bill was necessary to allow MU Health and the university’s Board of Curators to move more quickly to support rural hospitals that may be in crisis. 

The bill gives MU antitrust immunity in a 25-county area across central Missouri because 85% of the system’s patients reside within those counties, Ransom said. The area includes Kirksville, Rolla and Sedalia.

“Antitrust immunity is really only needed in the presence of a large portion of the market share, which is something that in this 25-county area, MU Health Care provides a lot of the care,” Ransom told the committee. 

For Christoper Garmon, a health economist and antitrust expert who spent years overseeing hospital mergers at the Federal Trade Commission, the bill raises some concerns. 

Antitrust laws are designed to prevent one organization from consolidating too much market share, which can reduce competitiveness, drive up prices and reduce quality of care. 

But with rural hospital mergers or acquisitions, antitrust laws or investigations are rarely part of the picture, Garmon said. 

“If what MU wants to do is acquire struggling rural hospitals, or if they want to acquire non-struggling rural hospitals, antitrust is not an impediment to them,” Garmon said.

When hospitals of a certain size plan to merge, they have to file a notice with the FTC and the U.S. Department of Justice. The FTC does an initial review, which usually takes about a month. 

In most cases, that is as far as an investigation into a merger will go if market competition concerns aren’t a part of the picture. But if competitiveness is a concern, the FTC moves forward with a second investigation, which can often be costly for the hospitals requesting the merger. 

Still, Garmon said, only 2% of hospital mergers undergo that full second investigation, and they almost never involve rural hospitals. 

“There’s no competition there to lose,” Garmon said. “They still struggle, even without any competition.” 

Hellebusch agreed that competition is rare in rural areas — and even having a full slate of inpatient care isn’t enough to keep the lights on for most rural hospitals. 

“We’ve been closing now for 15 to 20 years,” Hellebusch said. “In a position like mine, it is imperative that I have options. Independence is an option, acquisition is another one.” 

For Garmon, the legislation appears to provide more options for a large entity like MU, but doesn’t put any new options on the table for a hospital like Hermann’s. 

“If it was just about rural areas, then MU Health would get antitrust immunity in areas where it would not need it,” Garmon said. “But if MU Health proposed acquiring Boone Health, its only competitor in Columbia, Missouri, that would undergo a full investigation by the FTC. I can almost guarantee it in mergers like that.” 

Similar legislation has been passed in other states, but included more oversight measures than the current bills in the Missouri House and Senate. 

In North Carolina, for example, the FTC in 2023 opposed a piece of legislation that would have given the University of North Carolina Health system similar latitude. 

“Because such collaborations are already permissible under the antitrust laws, the main effect of S-743 would be to shield mergers and conduct that would violate the antitrust laws by depriving patients and workers of the benefits of competition without the efficiencies of quality improvements,’ they wrote in a letter to lawmakers. 

Evidence shows better profit margins after mergers, but less access to local care 

Hospital mergers and acquisitions are a growing trend across both rural and urban healthcare settings. 

Affiliations between rural hospitals and regional and national health systems increased from 10 to 30 per year in the 2000s to about 30 to 70 per year throughout the 2010s, research shows. 

The research found that hospitals that became unaffiliated or left major hospital systems were more likely to add services, while hospitals that joined larger systems were more likely to lose services. 

Psychiatric care, intensive care units, obstetrics and hospice care were among the services most likely to be cut if hospitals reduce the types of care they provide, the study found. 

The National Bureau of Economic Research looked into the impact mergers and acquisitions can have on maternal health and found an increase in procedures typically linked to more-resourced healthcare providers. 

Still, research found small increases in maternal morbidity in those areas, although newborn health appeared unchanged. 

“When acquisitions do not lead to obstetric unit closures, outcomes often improve, especially for Medicaid patients,” the study’s authors wrote. 

But the evidence overwhelmingly points to price increases and decreased competition for patients and employees. 

In Albany, Georgia, the Phoebe Putney Health System’s governing body acquired the only other hospital in the city, despite the FTC’s challenge to the merger. Immediately after the merger in 2012, prices rose 43%, Garmon’s research shows. 

While prices eventually dropped back to their premerger rates, the quality of care declined. Garmon and his colleagues measured the system’s mortality and readmission rates and patient satisfaction scores. 

In one example, they found that the system’s pneumonia mortality rate increased from 11.9% in 2010 to over 20% in 2015, far exceeding statewide or national averages. 

Still, rural hospitals affiliating with a larger regional provider were associated with a lower risk of closure compared with being independent. 

When it comes to keeping doors open, Ransom argued that MU Health is uniquely positioned to improve quality of care while restraining healthcare prices, which are rising across the board after a period of stagnation during the COVID-19 pandemic. 

The university is investing in workforce pipeline programs to shore up doctors and nurses in rural areas, which could help MU Health continue to operate new hospitals or clinics. 

Similar legislation in other states tends to have more oversight baked into the approach, Garmon said. Although the one-and-a-half page legislation specifically states that it does not protect MU Health from being investigated for things like price-fixing or market allocation schemes, it includes very little oversight or checkpoints for MU Health in the future.

For Ransom and MU Health Care, those concerns come down to trust in the hospital’s track record. 

“The first thing I would say, in terms of what assurances you would have that MU Health Care is not going to be a predator, is to look at our history,” Ransom told lawmakers. “There is nothing in MU Health Care’s history that would suggest that we’re going to behave in any way other than as a safety net.”