Hey, there is some good news about hospitals' seemingly endless appetite for acquisitions/mergers/consolidation. A new study suggests that physician practices acquired by hospitals increase their use of care management processes, which the authors say may improve those practices' ability to manage chronic disease and perhaps even to improve the quality of care. That's good news, right?
No so fast.
For one thing, the results don't show that acquired practices actually use the care management processes (CMPs) more than physician-owned practices, only that their use of them increased post-acquisition. For small and medium size practices, the use of CMPs rose at about the same rate regardless of ownership, with use in hospital-owned practices remaining slightly higher.
For large practices, the rate of use is around 40% for both hospital owned and physician owned practices. That's right, no real difference. The rates fell noticeably for the physician-owned practices (which seems very odd) and rose just as dramatically for the ones acquired by hospitals. But they ended up at around the same rate.
Oh, and by the way: practices owned by hospitals didn't increase adoption use of health IT any faster than ones owned by physicians, as one might have expected.
In any event, the study doesn't show that hospital owned practices are likely to do a better job of chronic disease management. At best, one can conclude that the care in those practices is finally up-to-par with physician-owned practices. So, yes, while one can purport that hospital acquisition of physician practices may improve care, the study doesn't seem to support that such care is likely to be any better than care from physician-owned practices.
Let's look at another aspect of hospital consolidation. There has been substantial evidence that intra-market consolidation causes hospital prices to increase. Most recently, Gaynor, et. alia found that a triopoly raised prices around 5%, a duopoly raised them about 7%, and an actual monopoly caused prices to go up about 15%. I know the AHA defends such consolidation (while, of course, decrying insurer consolidation), but if anyone who isn't being paid by hospitals agrees with this position, I feel bad for them.
Now there is new evidence that consolidations can raise prices even when they don't occur within the same market. A new study looked at hospital mergers that occurred within the same state but not within the same market. It found that prices went up 6-10% in those situations.
The price increases were most noticeable for mergers where the hospitals were within a 30-90 minute drive, but were still almost as significant when the hospitals were more than 90 minutes away. That strengthens the hypothesis that these increases are not due to a common customer or insurance market, but due to exercising market dominance,
Curiously, mergers that crossed state lines did not show the same kinds of impacts.
Leemore Dafny, one of the lead authors, had (in Marketplace) these words of warning for hospitals thinking of such mergers: "If you are doing it because you think in the long run it will serve your community well, you should think twice." Dr. Dafny's premise may be the flaw, because -- as I've written before -- I'm not sure community benefit is uppermost in the strategy of even non-profit hospitals.
Lest anyone think that Dr. Dafny has a bias against hospitals, she's also been critical of insurance market consolidation.
Hospitals aren't just buying up physicians and other hospitals. For example, they're looking to get in the health plan business (which I've already expressed my doubts about), and The Wall Street Journal reports that they are now big in the urgent care business. The Urgent Care Association of America estimates that 22% of urgent care centers are owned by hospitals and another 15% are in joint ventures with hospitals.
The argument for hospitals getting in the urgent care business is that urgent care centers can treat patients who might otherwise go to the ER, but at a lower cost and with a shorter waiting time. It sounds like a win for consumers, but if it is, I'm not sure if that was the goal or a happy side effect. Hospitals don't need to actually own/JV with urgent care centers for consumers to get those benefits, which make me a little skeptical that the hospitals' efforts are about the consumers, as opposed to their own bottom lines.
A new study in Health Affairs found that retail clinics actually raise spending, as there was less substitution of more expensive care and more treatment for low-acuity conditions that people might have simply not sought care for. Retail clinics aren't urgent care centers, and the HA results aren't directly applicable, but I'll reserve judgment as to whether hospital-owned urgent care centers actually save any money, or if they are just another way to increase hospitals' hold over their markets.
Maybe consumers don't care. We're increasingly in narrow networks anyway, so maybe choice of health systems seems obsolete. Still, if consumers realized the impact on their costs of having limited provider choice, or if they truly understood how much variation in pricing there was between providers even in "competitive" markets (see Gaynor again), maybe it would be different.
Hospitals -- excuse me, health systems -- argue that their various strategies for consolidation are essential to their becoming integrated delivery systems/Accountable Care organizations/etc. Through these new, broader, deeper arrangements, they supposedly can deliver higher quality care for less money. It seems plausible, even logical, but so far the evidence is not very compelling.
Look, don't get me wrong: hospitals are essential to our health and in our health care system. I just don't think they should be the centerpiece of either, not with their medical orientation and their big fixed costs. It's like having manufacturers try to drive a service economy; both service and costs suffer.
In the meantime, I'm still waiting for that good news about hospital acquisitions.