Stanley Feld M.D.,FACP , MACEThe Obama administration has encouraged local hospital systems throughout the United States to consolidate physicians practicing in their hospitals.
Hospital systems have found this attractive. There has been a movement to buy physicians’ practices and then pay physicians a salary. This has been encouraged by the Obama administration because someone in the administration believes this will encourage physicians to stop over testing.
Hospital systems love it because they understand that brick and mortar facilities are not worth as much as they use to be. If they own physicians’ intellectual property in the form of primary care physicians and skills in the form of surgeons, the value of the hospital system increases.
It has not worked out as well as many hospital systems would like because when physicians worked for themselves they were more productive than when they worked for the hospital system.
The Obama administration also believes that it can bundle the payment of a treatment and share the savings with the hospital system if the treatment costs less. If the treatment uses more assets and costs more the hospital system will not be paid.
In other words, the government and the healthcare insurance industry want to offload the risk of treatment to the hospital system. They administration thinks this will force hospital systems to deliver a better quality of care. You may recall quality of care has not been defined adequately.
This policy doesn’t work because reasons for hospital readmissions are multifactorial. Many of those factors are uncontrollable. One hospital system can also divert the patient to another hospital system or treat the readmitted patient in the emergency room.
The Obama administration is encouraging Accountable Care Organizations. There are so many problems in forming, administrating and managing ACOs that they are destined to fail.
Anyone reading the administration’s propaganda would not think so, but it is true, and as time goes on it will become apparent.
Finally, hospital systems and physician groups are realizing the negotiating power they are accumulating by consolidating and integrating physicians’ practices.
Consolidation is not good for the patients. It is great for the hospital system and the large independent physician specialty groups. Physicians who have sold their practices to hospital systems will not do so well because the hospital systems are in control of the collections and salaries.
Large medical specialty groups are negotiating with Obamacare’s new healthcare plans. These providers are demanding, and in some cases securing, pretty rich reimbursement rates from the new Obamacare health plans.
It is the same thing that happened in the 1980’s when HMOs negotiated high reimbursement deals with medical and surgical specialists the HMO wanted in the group. The HMO’s reasons were to promote the HMO’s brand and to get better medical results for the patients they had enrolled.
“To take care of patients that will be covered by the new insurance scheme, these providers are requesting payment rates that are higher than what they're being offered by Medicare. Some providers are even insisting on premiums over what they're paid by the existing private, employer-based health plans.”
Hospital systems in a town they dominate are doing the same thing. The result will be an increase in the costs to the government and the healthcare insurance companies. They will pass the increased costs on to the consumers.
“Some of the Obamacare plans, stuck in markets where there are few competing groups of providers to choose among, are being forced to accept these high prices.”
The Obama administration told us, at the passage of Obamacare, that providers would be discounting to get the volume of business that Obamacare offered as the new legislation banded large groups of patients into statewide insurance pools.
The defective central premise was that Obamacare would entice providers to take lower reimbursement because of increased volume.
“The people that now seem most likely to enter these state-based insurance pools, and buy the new coverage, represent a costly mix of patients with a lot of pre-existing medical conditions. The volume is also unlikely to materialize.”
Obamacare has tripped over its central premise. It is not going to lower costs. It is going to raise costs.
Obamacare has stimulated the consolidation of hospitals and physician groups that's now rampant in healthcare. This consolidation is starting to give providers leverage over Obamacare’s health plans.
This unintended consequence of Obamacare was obvious to most healthcare policy thinkers who believe that control and planning do not work. Unfortunately, President Obama did not listen to them.
The other thing President Obama did not listen to is that Health Maintenance Organizations (HMO’s) of the 1980 and 1990s did not work. Obamacare is a HMO on steroids.
“Under the scheme, doctors are paid lump sums of money to care for large groups of patients.
“The idea is to put the financial risk on the doctor for the cost of the medical care that they deliver. This was a central premise for how Obamacare would put financial pressure on providers as a way to help to lower healthcare costs.”
Physicians and Hospital Systems have been to this movie before.
Hospital Systems are making believe they are taking Obamacare’s financial bait. They are using the concept to frighten physicians and buying local medical practices.
Hospital systems’ goal is to get a geographic monopoly then take advantage of the negotiating monopoly. Physician groups especially specialty groups will stay independent of hospital systems, integrate practices and get in a negotiating reimbursement.
This will increase the cost of medical care. Everyone knows all healthcare is local. Central control of healthcare is innately flawed.
This is one of the many defects in Obamacare’s structure.
Obamacare has dismantled the last vestiges of local competition among physicians for patients.
Now Obamacare will have to deal with the physician and hospital system cartels it has created.
The victims in all of this are patients and the cost of patient care.
The Obama administration’s public service campaign is starting to sell Obamacare’s virtues to young people through the NFL, NBA and major league baseball. It is also signing up non suspecting consumers at supermarkets and churches.
Good luck. I think everyone is starting to catch on.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone
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