The perils of health systems

Last week I reviewed an article on some of the potential positives and negatives of large, integrated health systems. A recent 60 Minutes episode talks about some of the perils by examining how Sutter health system has become a near monopoly provider in Northern California. Consider the following interaction between Leslie Stahl of 60 minutes…

On the promise and peril of health systems

Integrated delivery networks. IDNs. Accountable Care Organizations. ACOs. Systems of care. Health systems. Whatever you call them, many health policy experts claim that they are the best way for the U.S. health care system to deliver high quality care in a cost-effective manner. But is that really the case? A commentary by UCSD professor and…

Trends in hospital consolidation

The National Institute for Health Care Management (NIHCM) has some nice slides describing trends in hospital consolidation. First, we see a trend of increased hospitalizations over time. Further, these mergers are not small. In 49% of cases, the acquired (i.e., smaller) hospital has revenue of >$100m and in 19% of cases the acquired hospitals has…

Market consolidation in California

Yesterday, I discussed the idea of managed competition in California.  One of the original tenets of managed competition was insurers having integrated, mutually exclusive provider networks.  This would mean much more consolidation on the provider side.  While this could improve quality, there is also a risk that prices could rise.  In fact, this is what…

Do hospital purchases of physician practices increase or decrease prices?

The effect of health care industry consolidation on prices is a question argued about by many including researchers, economists, anti-trust, lawyers, regulators and more.  There is evidence that health plan consolidation increases premiums, and hospital consolidation increases price. For instance, Dafny et al. 2015 writes: The harsh reality is that it’s difficult to find well-documented…

Did the ACA cause industry consolidation?

The Affordable Care Act (ACA)–among other things–mandated a number of reforms to the Medicare reimbursement system.  For instance, the ACA created Accountable Care Organizations (ACOs) and bundled payment initiatives were initiatives.  If Medicare started paying providers more based on quality and total cost of care across all provider settings, one would hypothesize that industry consolidation would accelerate.…