Risk for Consumers as Healthcare Systems Rapidly Expand

At a social event in Ann Arbor two nights ago, much of the talk centered about how a regional health system had just announced the purchase of a large physician cardiology group just a few months after the purchase of an even larger private group of internists. The rationale apparently was to provide the hospital system with more expertise in ambulatory care and also because the CMS is ratcheting down reimbursement for outpatient visits.The physician groups think that their revenue will be increasingly squeezed. Here are some other similar announcements (see: Kentucky's Louisville Cardiology Group Joins Baptist Hospital East; Chicago-Area Cardiology Group Joins NorthShore University Health System).

I have previously commented about the emergence of "big medicine" which consists of big payers (government and health insurance companies) + big pharma + big healthcaare providers (large health systems) (see: Physician Private Practice Declines; the Last Barrier to Emergence of "Big Medicine"). The majority of new medical school graduates will be salaried hospitalists, working for the increasingly large health systems. As highlighted in a recent article, all of this may result in higher costs for consumers rather than cost savings as originally anticipated (see: Consumer Risks Feared as Health Law Spurs Mergers). Below is an excerpt from it:

When Congress passed the health care law, it envisioned doctors and hospitals joining forces, coordinating care and holding down costs, with the prospect of earning government bonuses for controlling costs. Now, eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups eager to share costs and savings, and cash in on the incentives. They, in turn, have deployed a small army of lawyers and lobbyists trying to persuade the Obama administration to relax or waive a body of older laws intended to thwart health care monopolies, and to protect against shoddy care and fraudulent billing of patients or Medicare. Consumer advocates fear that the health care law could worsen some of the very problems it was meant to solve — by reducing competition, driving up costs and creating incentives for doctors and hospitals to stint on care, in order to retain their cost-saving bonuses....Those agencies are writing regulations to govern the new entities, known as accountable care organizations. They face a delicate task: balancing the potential benefits of clinical cooperation with the need to enforce fraud, abuse and antitrust laws....Congress’s purpose was to foster cooperation in a health care system that is notoriously fragmented. The hope was that the new law would push doctors, hospitals and other health care providers to come together and jointly take responsibility for the cost and quality of care of patients, especially Medicare beneficiaries....“In some markets, [said an expert in the field], “the dominant hospital is like the sun at the center of the solar system. It owns physician groups, surgery centers, labs and pharmacies. Accountable care organizations (see: Hospital Executives Search for the Formula for an Accountable Care Organization) bring more planets into the system and strengthen the bonds between them, making the whole entity more powerful, with a commensurate ability to raise prices.”

This consolidation of healthcare systems will provide them with the opportunity and power to negotiate on a more equal basis with health insurance companies (see: Health Systems Use Their Regional Dominance to Muscle Insurance Companies; Comparing the Details of Hospital Charges in the State of Oregon). In reality, the insurance companies and the health systems will be sitting around the table and cosily agreeing about how to divvy up the ever-increasing pot of money being allocated to healthcare (see: As Hospital System Expands, Patient Advocates Worry). There will be no way to stop this juggernaut unless and until helathcare consumers, their employers, and the federal government yell enough for the last time. The way things are going, healthcare reform will do nothing but increase the cost of healthcare delivery.

Comments

[Doug Mitchell, MD]

The study cited in my earlier comment is at
http://www.nejm.org/doi/full/10.1056/NEJMp0708558
(The automated linking included the parenthesis and period at the end.)

[Doug Mitchell, MD]

Data suggest the "common wisdom" that preventive care saves tons of money is wrong (http://www.nejm.org/doi/full/10.1056/NEJMp0708558).

If one assumes the consolidation of systems is unstoppable, how might the above study be good news?

The feds could more easily -- and with less push-back --heavily incentivize preventive care from these systems.

Why? Fewer entities are easier to monitor. And if the study is right, the systems could make as much $$$ preventing disease as treating it.

Costs being equal, is it better for a woman to die at age 80 because years earlier she was (a) repeatedly stented, or (b) put on statins?

Of course, this scenario wouldn't decrease total expenses (the 800 lb problem). But might at least *value per healthcare dollar* be increased?

Or am I in an overly optimistic mood today?