Hospital systems were merging before the Affordable Care Act passed, but the law has thrown fuel on the fire. And by “fuel,” I mean money.
Hospitals justified their mergers by claiming they helped reach economies of scale. But the mergers also reduced competition, helping the hospital systems negotiate higher reimbursements from health insurers.
Then came the A.C.A., which envisioned large, integrated provider networks, and the government was willing to hand out billions of dollars to providers that successfully implemented the government’s vision of quality care.
The key to success was to get physicians to become salaried hospital employees, and so hospitals expanded their efforts to buy private practices. Last summer, CNN reported that hospital purchases of physician practices were up 30 to 40 percent in the previous five years.
Becoming a salaried hospital employee will almost certainly change how doctors practice medicine. The doctor no longer “gets paid more for doing more,” which critics claim drives up costs. On the other hand, new financial incentives intended to curb costs and increase profits may mean that doctors get paid more for doing less, which may not be in the patients’ interest.
The changes also help hospitals ensure a constant flow of high-paying procedures. For example, health insurance might pay $1,000 to treat an oncology patient in the doctor’s office, but $5,000 if it’s done in a hospital.
Hospitals are probably the big winners under the new system. They are charging more, while paying physicians less. How that will affect access to physicians and patient care is uncertain, but both physicians and patients were always going to be pawns in a bigger government-run health care chess game.
There is nothing wrong with an integrated hospital system or paying physicians a salary; Kaiser has done it effectively for decades. The problem is with the government imposing the system based on what bureaucrats think is the best model of care delivery.