Around 14,000 physicians left private practice in order to join hospital groups between July 2016 and January 2018, according to a February report in The Journal of the American Medical Association.
Plus, in spite of the pandemic, hospital systems saw almost 80 hospital acquisitions nationwide in 2020. While this is down from 2019, which saw 92, it is a trend that is not expected to go away.
Early 2021 has already seen fewer mergers but the ones taking place are massive. There have been 13 announced acquisitions, which potentially will involve a total of 72 hospitals.
We should expect to see more mega deals like the recent merger of Dignity Health and Catholic Health Initiative, which formed Common Spirit in 2019. With 142 hospitals in 21 states, Common Spirit is the second largest nonprofit healthcare system in the country.
Experts argue that the future of the American health care system will be defined by these mergers.
This trend has come out of necessity. With the need to upgrade to the latest technology and the never-ending staff training that results, it is difficult for even medium-size hospitals to keep up.
The benefit for multi-hospital systems is that by acquiring smaller hospitals the system is able to set up a patient feeder system for its larger facilities. This increases the total revenue stream in spite of losing money at small hospitals.
Smaller hospitals gain the security of joining a stable system and can take advantage of the support services of the larger system.
Communities gain the advantage of being able to keep their struggling hospitals open, but the side effect is that patients do not always stay in the community and might be transferred to a facility two hours away. This also can affect the revenue that small hospitals previously contributed to the local economy.
In addition to hospital mergers, health systems have been adding physician groups.
The passage of the 2009 Health Information Technology for Economic and Clinical Health Act (HITECH) forced physician groups to join a hospital system. HITECH required that physician clinics and hospitals upgrade their electronic health record (EHR) systems to meet government established meaningful usage standards.
Facilities and practices that were able to afford the infrastructure for an upgraded EHR were able to take advantage of government grants.
Clinics that were not able to build or afford a certified EHR experienced significant reductions in Medicaid reimbursements. Because Medicaid can be over half of a physician’s income, this spelled doom for many small providers.
In addition, small physician groups, like small hospitals, cannot afford large support staff.
One person commonly wears three or four hats, forcing small-clinic physicians to spend most of their time dealing with the EHR or figuring out how to meet the ever-changing criteria of private insurance companies.
This has many benefits. Large health systems have a whole department to manage this, freeing up the medical staff to focus on patients.
Yet, there are also tradeoffs. Patients may feel like they are being cared for by an ever-changing group of physicians and not just the primary care physician who has known them for years.
All of this has the potential of creating an impersonal health care system and many patients already feel lost in the medical bureaucracy.
Health care giants are doing more than just acquiring physician groups and community hospitals; they are diversifying services.
Recently, United Health Group announced a $13 billion acquisition of Change Healthcare, while Cigna is set to purchase the telehealth provider MDLive, and Centene Corp is buying the behavioral health giant Magellan Health for $2.2 billion.
These are big moves, and the significance has as much to do with profit margins as with wielding influence. Just like the power currently wielded by big technology companies and pharmaceutical manufacturers, health care giants are expanding power.
So, what is the moral response?
First, we have to acknowledge that this is the future of health care, and it is not necessarily bad.
Small- and even medium-size communities need these mergers to maintain their local hospitals. Many of these mergers have helped to make the nation’s health care system more efficient and stable and to ensure coverage.
While all of this is needed, it does not come without consequence and the moral community needs to pay attention.
As more and more of our clinics and hospitals join large corporations, communities begin to lose control of their health care resources, and patients potentially have fewer options. Some communities are seeing virtual health care monopolies.
If the corporate focus is not primarily on patient care, then profits can easily dictate what services people can receive.
Instead of expanding coverage and services, we might see a pay-to-play arrangement where the wealthy get the best care and the underprivileged are forced to have substandard care or wait months for treatment.
Finally, the growing power of health care conglomerates puts them in a position not only to influence federal law but also to control the health care system as a whole. This, in turn, raises cost and potentially lowers the quality of services.
As so many of these health care behemoths are privately owned, it is difficult to know how or why their boards of directors are making decisions. This erodes transparency and public trust.