Accountable care shouldn't equal consolidation

In Health care’s dilemma: Competition or collaboration? the Washington Post’s Steven Pearlstein points out that health care reformers tend to favor integrated care providers like the Mayo Clinic, which deliver affordable, quality care.

But, as he says:

Here’s the dilemma: The only way for the health-care industry to move toward accountable care is to further accelerate a process of consolidation that has already reduced competition and increased market power. Hospitals are once again busily buying up physician practices and outside laboratories that used to compete with them, incorporating them into their “systems.” And independent physicians who used to compete with one another are quickly merging into multi-specialty practices, offering a full range of services to large blocks of patients for fixed annual fees – an arrangement known as “capitation.”

I agree with Pearlstein that hospital consolidation is a likely next step in the evolution of the health care system. But it’s untrue that “the only way… to… accountable care is… consolidation.” Certainly the easiest way for providers to gain clout with health plans is through getting bigger and developing networks that the plans can’t get away with excluding. But along with market power come serious downsides to consolidation. For one thing, when physicians sell their practices to hospitals they tend to adopt an employee mentality. They stop working hard to build their practices and start taking it easy and griping about work conditions and salary. Big systems can become unwieldy and require a lot of extra administrative expense. And the days of bulking up and extorting health plans for higher payment are coming to a close as health plans face pressures to keep premiums down and as governments intervene. For example, Partners HealthCare in Boston, which for years used its non-excludability to extract premium reimbursement levels from health plans, is facing pressure from the state to be part of the solution rather than part of the problem.

Integrated Delivery Networks (IDNs) are working hard these days to prevent “leakage,” i.e., patients leaving the system to receive care elsewhere. Conscientious physicians are unhappy about this trend, because it can mean referring patients to second-best choices.

The alternative to consolidation is physician-led Accountable Care Organizations (ACOs) and Patient Centered Medical Homes (PCMHs) that provide patients with a high-service, concierge-style primary care physician who has the freedom and information resources to refer patients to high quality, efficient specialists and hospitals that meet their specific needs. One key is interoperable electronic health records and community based health information exchanges that allow physicians to communicate effectively with all providers, not just those in their big hospital-led systems.

This will require physicians and their  financial partners to step up to the plate and create alternatives to the big IDN cocoons. If they do, and payments are based on capitation and outcomes rather than fee for service volumes, there should be great opportunities to forgo the consolidation model and encourage hospital-based systems to compete against one another in the patient’s interest.

In Boston, I’d like to be able to see whichever provider makes the most sense for my specific issue. I don’t want to be limited to Partners, CareGroup or some other system. I’d rather have an independent primary care physician who can work effectively with everyone and I don’t see why this shouldn’t be the case.

November 24, 2010

7 thoughts on “Accountable care shouldn't equal consolidation”

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