


There’s a decent chance your doctor’s practice was bought up by a hospital in the last decade or so. Such consolidation has run rampant for years, and a new study looks at the impacts. The bottom line: Hospital consolidation results in higher hospital profits, higher costs to consumers, and maybe worse long-term outcomes for patients.
For this, the hospitals’ shareholders should say, “Thanks, Obama,” seeing as Obamacare was crafted in part to drive such consolidation.
HOUSE ELECTS MIKE JOHNSON AS SPEAKER AFTER THREE WEEKS AT AN IMPASSE
Increasing regulations, mandates, taxes, and subsidies will generally favor bigger businesses over smaller ones and thus drive consolidation. Obamacare did all of the above and also included specific provisions aimed specifically at incentivizing provider consolidation.
Start with this paper by Obamacare architects Bob Kocher, Zeke Emanuel, and Nancy-Ann DeParle.
The article clearly instructs private practice physicians to sell out to larger institutions. The authors’ advice to doctor’s offices includes “collaborating with hospitals … redesigning medical office processes to capture savings from administrative simplification.”
“Only hospitals or health plans can afford to make the necessary investments in information technology and management skills,” the authors declare.
“Under the Affordable Care Act,” Kocher, Emanuel, and DeParle write, “physicians who effectively collaborate with other providers to improve patient outcomes, the value of medical services, and patient experiences will thrive and be the leaders of the health care system.”
Under Obamacare, the authors write, “the health care system will evolve into 1 of 2 forms: organized around hospitals or organized around physician groups.” That is, the reshaped healthcare system the architects imagined would be a more consolidated system.
Under the Obamacare vision of the future of healthcare, the authors foresee that “physicians organize themselves into increasingly larger groups.”
As Kocher summarized his article later, “I believed then that the consolidation of doctors into larger physician groups was inevitable and desirable under the ACA.”
Sure enough, that consolidation has happened. And it’s been bad — even Kocher admits as much.
A new paper this week drives home the effects of consolidation.
Insurance data shows that when independent hospitals are acquired by larger chains, operating profits rise by $60K per bed per year on average because staffing shrinks (mostly back office but bedside too) and prices go up. Readmissions also rise. https://t.co/FUKHLcCP1U pic.twitter.com/G6EtIXgiQv
— Lydia DePillis (@lydiadepillis) October 23, 2023
They find that consolidation results in “higher prices” and that “corporatization may worsen quality of care on some dimensions.”
All in all, the new research paper found that consolidation does drive efficiencies and reduce middle management, which is great. But those savings seem to accrue to shareholders rather than patients, and they come with slightly worse health outcomes.
Thanks, Obama.