Hospital consolidators need to take accountability for results

As hospital consolidation increases and health systems grow, some researchers and policy makers are airing concerns that hospital mergers actually increase healthcare prices and don’t deliver promised savings to their communities.  As an article co-published by Kaiser Health News and The Washington Post, “As Hospitals Consolidate, They Get Pricier” put it, “The Federal Trade Commission found rapidly rising prices in some markets after hospitals joined.”  The Federal Trade Commission’s view is that “the increasing consolidation of hospital markets (is) of national concern. “

My view: Big health insurers have gotten a bye on anti-competitive consolidation, and they have the upper hand negotiating with independent hospitals and small systems, which have have no pricing power for the bulk of their other business with Medicare and Medicaid.  So hospital consolidation and physician integration merely level a presently unequal playing field.

That said, resistance to mergers from insurers and skeptical regulators will grow. Hospitals that seek to merge need to do more than make the legal case to regulators that consolidation isn’t anticompetitive. They will have to take a value proposition, not merely market clout, to payers at the bargaining table.  They will need to take a community benefit case to the public and also be willing to accept accountability for merger results.  To be precise, merging hospitals will need to demonstrate they are successful in delivering on their promises to increase efficiency and improve the quality and value of their care.

One model: The “certificate of public advantage (COPA)” issued by the State of North Carolina to the Mission Health System in Asheville, NC.  The COPA requires the health system to file financial reports with the state every year showing its keeping costs in line. Mission has done a good job and is ready with the facts to prove it. Others will have to do the same.

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: