A notable change in the US health system over the last three decades has been the intense horizontal and vertical consolidation of providers. We have seen hundreds of hospital mergers and the purchase of thousands of physician practices by these hospitals. While these large health systems claim this consolidation is necessary to help control costs, the reality appears to be that overall prices and spending has risen more rapidly, while quality may actually have declined. An article in Health Affairs details the consolidation which occurred just in the period from 2016 t0 2018, which has continued as we speak. By 2018 over 70% of hospitals were part of a larger health system, but 91% of all hospital beds were included in that tally, and over half of all physicians were employed or owned by these health systems. While the number of hospital beds covered by these large systems only increased slightly during the study period (it was already incredibly high), physician ownership rose by 11 percentage points just in this period. Today those numbers are much higher. For-profit and church systems were the most active consolidators. The effects of this consolidation have been much higher prices and profits and rising job dissatisfaction among physicians. I believe that a fundamental improvement in the US system would be to break up large health systems so that each urban area has at least 5 or 6 competing hospitals and to ban ownership of physician practices or employment of non-hospitalist physicians by health systems. This would restore competition on both cost and quality dimensions. (HA Article)
The Ongoing Consolidation of Large Health Systems and Independent Providers
About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at khroche@healthy-skeptic.com.
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I’ve talked with several physicians who were bought out by local hospital chains. Brutal negotiations (barely negotiations almost ultimatums). Interestingly here in Connecticut one of the chains is suing another for anti-trust activities.
Totally agree. In the 1970’s the community I lived in raised money, bought land and built a faciality for a local family medical practice so the community would have better medical coverage. It was somewhat a partnership between a group of doctors and a community board. At some point it became complicated for the community board to oversee this, so the board was dissolved, and the group of doctors took over ownership. In the last 10 years the practice was bought by a local hospital that became dominate in the county I live in; they almost own all health care industry in the county. This facility was my family physician for over 50 years until recently. I do not think it is a good idea for a hospital to own the local doctor, the doctor is restricted in the way he or she practices medicine, so I found a family practice that is independent. I mentioned this to my new doctor, and he stated his desire is to stay independent, he worked under the umbrella of a hospital and did not like it.