Qual­ity suf­fers, costs rise as hospi­tal sys­tems con­sol­i­date

Modern Healthcare - - NEWS - By Alex Kacik

Con­sol­i­da­tion will con­tinue to drive up health­care costs and re­duce qual­ity of care un­less law­mak­ers and reg­u­la­tors push pol­icy re­forms and rules aimed at in­creas­ing com­pe­ti­tion, ac­cord­ing to new re­search.

As providers in­creas­ingly look to con­sol­i­date in or­der to lower op­er­at­ing costs and cre­ate economies of scale, the Cen­ter for Health Pol­icy at the Brook­ings In­sti­tu­tion and Carnegie Mel­lon Univer­sity’s Heinz Col­lege last week said the trend has led to a dearth of com­pe­ti­tion. That’s why the health­care in­dus­try sees ris­ing prices, price vari­a­tion and un­even qual­ity of care, ac­cord­ing to the groups’ white pa­per.

The au­thors urge pol­i­cy­mak­ers and en­force­ment agen­cies to in­crease scru­tiny of mergers, re­strict an­ti­com­pet­i­tive prac­tices, lift bar­ri­ers to en­ter­ing health­care mar­kets and help in­de­pen­dent physi­cians re­main fi­nan­cially vi­able. Con­sumers should be able to ac­cess cost and qual­ity data, and providers must ac­cu­rately iden­tify in-net­work providers.

The past 15 years have seen sig­nif­i­cant con­sol­i­da­tion in hospi­tal, physi­cian and in­sur­ance mar­kets, and that trend is ex­pected to con­tinue.

Providers say they must merge to adapt to changes in federal pol­icy that cre­ate a fi­nan­cial in­cen­tive for hos­pi­tals to con­trol more of the mar­ket.

The CMS can spark com­pe­ti­tion by re­form­ing Medi­care poli­cies that en­cour­age con­sol­i­da­tion. One ex­am­ple is the new pay­ment system for physi­cians ini­ti­ated by the Medi­care Ac­cess and CHIP Reau­tho­riza­tion Act of 2015, or MACRA, which can boost or cut pay­ment de­pend­ing on qual­ity mea­sures that are dif­fi­cult and costly to gather for smaller prac­tices.

The states have work to do as well, the ex­perts said. States should elim­i­nate cer­tifi­cate-of-need reg­u­la­tions. And state li­cens­ing boards should fa­cil­i­tate prac­tices such as tele­health that pro­mote com­pe­ti­tion and in­no­va­tion.

Glenn Mel­nick at the Univer­sity of South­ern Cal­i­for­nia’s Scha­ef­fer Cen­ter for Health Pol­icy & Eco­nomics an­a­lyzed Blue Shield of Cal­i­for­nia pay­ments and found the av­er­age price for hospi­tal ad­mis­sions in Cal­i­for­nia in­creased 70% from 2004 to 2013, from $9,183 to $15,642. The jump was even more sig­nif­i­cant for the state’s big­gest hospi­tal chains, where the price for av­er­age ad­mis­sions in­creased from $9,183 to $19,606, or 113%.

With­out ef­fec­tive com­pe­ti­tion, hos­pi­tals can se­cure higher price con­ces­sions in their ne­go­ti­a­tions with in­sur­ers, the Brook­ings and Carnegie Mel­lon ex­perts said. Hos­pi­tals with fewer than four lo­cal com­peti­tors are es­ti­mated to have prices nearly 16% higher on av­er­age—a dif­fer­ence of nearly $2,000 per ad­mis­sion, re­searchers found.

As for qual­ity, less com­pe­ti­tion can lead to worse pa­tient out­comes, es­pe­cially when prices are set by reg­u­la­tors, as in the Medi­care pro­gram, ac­cord­ing to the pa­per. Medi­care ben­e­fi­cia­ries who experienced a heart at­tack had a 1.46% higher chance of dy­ing within one year of treat­ment if they were treated by a hospi­tal that faced few po­ten­tial com­peti­tors, re­search shows.

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