Growing hospital networks create a tension for health reformers

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A version of column was published on March 5, 2014 in the New York Times’ Room for Debate blog.

To remedy our fragmented health system, reformers want to consolidate health care. President Obama, for instance, has praised integrated health systems like the Mayo Clinic as a model for national reform. To that end, the Affordable Care Act drives more hospitals to become more Mayo-like by purchasing physician practices. Today, about 39% of doctors practice independently, down from 57% in 2000. Reformers appear to have gotten their wish, but whether patients or doctors benefit is questionable.

Research by the Dartmouth Atlas of Health Care found that the cost and intensity of health care varied depending on where you lived in the country. Dr. Atul Gawande’s influential article, The Cost Conundrum, vividly illustrates this research, and has been cited by President Obama himself. Encouraging the creation of large health systems would, in theory, better coordinate care, reduce practice variation, and lower costs.

There are benefits for physicians practicing in large systems. Overhead costs such medical malpractice, staffing, and billing are covered. Expensive electronic medical records are provided. Physicians are often on a salary, so their pay isn’t directly related to the number patients seen or the number of tests ordered.

For patients, coordinated care means that primary care physicians and specialists can communicate using the same record system, reducing the risk of medical errors and miscommunication. And a health system can implement new practice guidelines globally, rather than piecemeal by physician. That’s especially relevant when you consider that there have been major changes in cholesterol and hypertension treatment guidelines within the past few months.

But there are downsides. Not all health systems are created equal. Employed physicians lose their independence, and can be at the mercy of unscrupulous hospital administrators who force them to see more patients than is safely allowed, order unnecessary tests, or funnel patients to specific specialists, all to bolster a hospital’s bottom line.

And when hospitals increase their market clout, they can negotiate higher prices with insurers and drive up costs for patients.

Jonathan Gruber, an economist who helped shape the Affordable Care Act, sums up the dissonance health reform proponents face: “There is a tension between the benefits of coordinated care and the possible consequences of market power.”

Will reformers regret their push to consolidate health care? The answer depends on how this tension is resolved.