by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The latest Bloomberg Businessweek probes one consequence of the federal Affordable Care Act: greater incentives for hospital mergers.
To cut costs, health-care providers are linking family practices and specialists with hospitals, rehabilitation centers, and outpatient clinics. The hope is that consolidating services will eliminate redundancies, reduce waste, and improve patient outcomes by making it easier for medical professionals to coordinate care—all objectives of the Affordable Care Act.
In recent years, President Obama has pointed to large integrated providers such as Pennsylvania’s Geisinger Health System and Utah’s Intermountain Healthcare as examples of companies that deliver superior care at lower cost. …
… Yet the desire to expand coordinated care is creating health systems so big they can dictate prices. That conflict is playing out in the Partners deal, which has run into opposition from state regulators and competitors who say the company’s market power has warped medical charges in the state. …
… A 2012 review of academic studies by the Robert Wood Johnson Foundation found “hospital consolidation generally results in higher prices.” When hospitals buy doctors’ practices, they typically look for “enhanced bargaining power” rather than opportunities to improve care. “Lots of mergers happen that don’t lead to greater coordination, and there are ways to achieve coordination without mergers,” says Paul Ginsburg, a professor at the University of Southern California’s Schaeffer Center for Health Policy and Economics. “The higher prices for many mergers could be an order of magnitude greater than savings from coordination.”
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