Rampant consolidation in well being care has resulted in larger costs for sufferers. This consolidation — whether or not by personal fairness companies or different massive well being programs — has not resulted in larger high quality care, and in some circumstances, it has made care high quality worse.
In September, Ellen MacInnis, a nurse at St. Elizabeth’s Medical Heart in Boston, trekked to Washington, D.C., to testify earlier than a Senate committee concerning the excessive cost-savings measures mandated by the hospital’s dad or mum firm, the now-bankrupt Steward Well being Care. The personal equity-backed firm had been busy shopping for up hospitals and docs’ teams, then placing the squeeze on them to maximise earnings.
The then-CEO of Steward Well being Care was referred to as to testify earlier than the Senate Well being, Training, Labor and Pensions Committee. He refused and resigned quickly after.
Many Steward hospitals have been or shall be bought. However unchecked hospital consolidation stays a risk, and when hospitals purchase doctor practices, clinics, or different hospitals, sufferers virtually invariably find yourself paying larger costs.
The saga of Kyunghee Lee, a retired dry cleaner and seamstress in northeast Ohio, is a textbook instance. For years, NPR reported, she acquired annual injections at her physician’s workplace to alleviate her arthritis, at a price of $30.
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4 years in the past, her physician’s workplace moved one ground up in the identical constructing. Identical physician, similar photographs. However the price of her injections rose greater than tenfold, to $354. Why? Due to an more and more prevalent follow referred to as “hospital consolidation.”
Unbeknownst to Lee, her physician’s follow had been purchased by a hospital system. Her invoice now included the buying hospital’s “facility price” of over $1,200 (most of which Medicare — i.e., taxpayers — paid).
You may ask: For what facility, precisely? In any case, it was the identical constructing as earlier than.
Lee’s scenario occurs daily on this nation. And it’s time for it to cease.
Underneath present regulation, Medicare pays two to 3 instances extra for routine therapies administered in a hospital-owned outpatient clinic than it does for these in an impartial physician’s workplace. In lots of conditions, paying hospitals extra is smart. Hospital programs should be constructed to maneuver quick and deal with fixed crises, which require the next degree of assets to do the job properly. However profit-maximizing hospitals, suggested by astute monetary engineers, have sought to capitalize on this distinction even for routine companies the place this doesn’t apply.
At the moment, massive hospital programs are more and more shopping for up small doctor practices, altering the signal on the door, and sometimes tripling the quantity that they will invoice sufferers for the very same procedures, together with routine, run-of-the-mill companies which are simply and safely carried out exterior of a hospital setting.
Not solely are hospitals shopping for personal practices to reap the benefits of this billing loophole, however they’re additionally searching for to “consolidate” with smaller hospitals, which limits sufferers’ choices and squeezes them into paying larger costs. Hospital chains typically promote consolidation to employers, sufferers, and taxpayers to extend coordination, enhance high quality of care, and decrease prices. However these claims are doubtful. A considerable physique of proof exhibits that costs go up with out corresponding will increase within the high quality of care.
This can be a downside all through the US. About 90% of metropolitan hospital markets in the US are extremely concentrated, and greater than 52% of physicians work below certainly one of these consolidated hospital programs.
Former HHS secretaries: Congress ought to undertake site-neutral funds for well being care
When a doctor’s workplace is acquired by a hospital system, costs for a similar companies improve by 14% on common. For some companies, it’s a lot larger. A research launched by the Leukemia & Lymphoma Society discovered that most cancers sufferers with a number of myeloma are charged $2,029 in out-of-pocket prices for a similar therapy that may be administered in an impartial physician’s workplace for $809.
There isn’t a doubt that this habits hurts shoppers. It thwarts the same old market forces that might self-discipline prices, and the present regulatory setting has confirmed too weak or passive to curb this abuse. It’s time for Congress to shut a few of these loopholes.
Fortunately, even in at present’s extremely polarized Washington, there’s bipartisan assist to deal with prices by advancing what’s referred to as site-neutral cost reform—which might guarantee sufferers pay the identical value for routine companies no matter whether or not they’re offered in a hospital-owned doctor’s workplace. One such invoice — the Decrease Prices, Extra Transparency Act — handed the Home of Representatives in late 2023 with overwhelming bipartisan assist. And there’s room for Congress to go even additional and enact complete site-neutral cost reforms that might save Medicare greater than $150 billion over the subsequent decade.
That quantity should make all of us cease in our tracks. It’s a degree of financial savings that might assist decrease well being care prices, which have been rising quicker than inflation.
The phrases “site-neutral cost reform” won’t roll off your tongue. However we hope that quickly, they may. Curbing hospital cost abuse will improve entry to desperately wanted well being care and create a extra sustainable and fiscally accountable system. At a time when each Democrats and Republicans agree on this level, let’s not waste our likelihood to push again on this predatory habits.
Laura and John Arnold are co-founders and co-chairs of Arnold Ventures, a philanthropy that helps analysis to grasp the foundation causes of America’s most persistent and urgent issues, in addition to evidence-based options to deal with them.
