Easton Hospital’s announcement Thursday that it will be sold to a Massachusetts health care company came as no surprise to many observers who have been watching as Easton’s owner has been selling assets to reduce $15 billion in debt since last summer.
Easton Hospital and its assets were acquired by Steward Health Care LLC, a privately held, for-profit health group in Boston.
In a market dominated by Lehigh Valley Health Network and St. Luke’s University Health Network, can Easton Hospital, based in Wilson and one of the area’s smallest and for-profit hospital systems, survive?
George Nation, a professor in the law and finance departments at Lehigh University, believes it can.
“I think the market is big enough” to sustain Easton Hospital, Nation said. “I think there are plenty of patients to go around.”
Consumers benefit when there’s more competition, he said.
Hospitals generally don’t make money treating patients, but they generate income in other ways, such as investments and property sales, according to Chad Meyerhoefer, a Lehigh University business professor who has written about the economics of health care.
“Most hospitals lose money on just patient care services, they earn money from other sources,” Meyerhoefer said.
“They are not usually making large profits. Their revenues don’t exceed costs by very much. It’s the combination of all these things that usually puts them in positive territory,” he said.
Easton Hospital’s for-profit status is not as big a factor toward its profitability as much as its size, he said.
Larger hospitals and health care networks have more of an advantage to negotiate lower prices with insurance companies, he said.
“Two things that give a hospital negotiating power are size and also quality, so if they are in high demand by patients, there’s more pressure,” he said.
David Gilfoil, director of the DeSales University Master of Business Administration program, said health care systems have been facing pressures in three areas: reducing costs and improving patient outcomes and satisfaction.
“Our hospital plays an important role in providing convenient and quality health care for our patients,” said Damon Brown, interim CEO of Easton Hospital.
“Steward Health Care will help us maintain our position as a key institution and employer in our community.”