The Fog of Physician Practice Acquisitions

Ever since the mid-sixties when the grand plan for health care delivery began, health care consumption in the United States has accelerated. Hospitals sprang up on every street corner. Employer based (mandated) health care “insurance” accelerated this distortion and further detached the consumer of health care from the cost of health care. Free market forces were removed from the health care delivery model, as was most personal responsibility. Now we attempt to “engineer” the healthcare system through a foggy maze of ill-conceived regulation. We all suffer, some more than others.

In the meantime, the health of the average American has not improved much based on most credible studies. This is not to diminish the fact that great strides have been made to eradicate horrible disease and miraculous surgeries exist to enhance the lives of millions of people. This has happened in spite of the interference. Health care delivery largely remains responsive, not preventative. Health care delivery also remains episodic, not managed. Prevention necessarily lies in science outside the boundaries of health care delivery. Controlling human behavior is a tricky thing.

It is important to understand that the cost per delivered unit of service (by most definitions) has fallen, but consumption has risen more. No surprise, since the consumer does not pay for what they are consuming, or they simply do not make the connection.

The instigator of this ill-fated system is traceable way back to the days of hippies and Vietnam, federal and state government. Since that time these well-meaning folks have introduced a myriad of textbook based “solutions” in response to what they publicly label the rise in health care “costs”. One of the more effective means deployed is to simply not pay for it, or to continuously re-define what it is that they are paying for, see “bundling”. This of course has shifted the true cost of runaway consumption to those poor suffering people who work and pay, directly or indirectly, for private insurance. It has also driven the consolidation in health care delivery.

Focusing back on today’s reality, it is interesting or alarming to look at what is happening (again) in Massachusetts. The delivery of health care is increasingly becoming concentrated into fewer hands, large multi-hospital/physician oligopolies. I suspect the popular notion is that this will someday result in more efficiency. That is possible but a rather high risk proposition. The oligopoly primary strategy (for now) is to acquire market share (patients) by acquiring the folks who control their healthcare, physicians and often other smaller hospitals. Physicians are extremely valuable to these oligopolies, because the supply of physicians is artificially controlled. Physicians are scared, they are afraid of being locked out of large systems controlled by something referred to as “Accountable Care Organizations”.

You can’t really blame the people in control of the oligopoly who are pursuing these strategies; they are simply reacting to the weight of regulatory forces imposed upon them. But alas, is it really possible that when hospitals acquire physician practices, “costs” (consumption) rise at that hospital, and at all the hospitals controlled by the multi-hospital/physician network? The answer appears to be Yes, based on the article below. No doubt this is an outcome that we should consider, and attempt to prevent.

Complete Article Here

 

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