Hospitals Likely to Consolidate in Response to Compliance Regulations

Published November 9, 2010

Hospital consolidations are expected to increase in the coming year, leading to fewer independent hospitals and doctors, a trend some critics fear could lead to higher health care prices and diminished quality of care.

Costs Will Drive Mergers

According to Edmund Haislmaier, a senior research fellow at the Heritage Foundation, the new health care law gives hospitals more reasons to merge with rivals because of its emphasis on integrated systems where hospitals and doctors coordinate care.

“You’re going to see more concierge medicine—for a fee, a doctor will treat you and your family. This will lower costs for physicians, and they can cut their overhead, personnel, paperwork, and compliance costs,” Haislmaier explained.

He predicts once the insurers with other areas of coverage besides personal health care realize what a hassle and expense compliance will be, they will drop out of the game.

“Physicians have to start thinking like they are in a binary world now. You’re either going to have to work with someone who deals with the risks and fills out the paperwork, or you’re going to have to drop out of this system. If you’re a physician, you can live in this environment or think about radically opting out,” said Haislmaier.

‘Power over the Doctors’

Jane Orient, M.D., the executive director of the Association of American Physicians and Surgeons, takes a similarly dim view of consolidation. She points out prices rose rapidly in some markets after hospitals consolidated.

“Politicians and bureaucrats have been trying to make consolidation inevitable and grab power to be as exclusive and charge whatever they want. Call it a ‘monopoly’ or a ‘cartel,’ but the result is always the same in multiple states, and it’s never good for the consumer,” Orient said.

Orient says an added benefit from the government’s perspective is an easier path to exercising authority over the health care system.

“Washington wants to have power over the doctors. That’s the whole idea. Even though hospitals will be privately owned, they will be heavily regulated, and a lot of physicians will be forced out due to compliance costs,” Orient said. “The public will have to take what they can get. This means exorbitant rates for what you peviously could pay a hospital to perform for a procedure 30 years ago.”

Kenneth Artz ([email protected]) writes from Dallas, Texas.