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The Podium

Checks and balances needed for health care provider consolidations

A lot has been written about how health care is changing: new methods for paying for care, new tools to compare the cost and quality of medical services and institutions, and new insurance options for employers and consumers. One change that should be concerning to anyone who pays for health care is how the provider consolidation that is taking place could make health care more expensive.

Some have suggested that the wave of mergers, acquisitions and clinical affiliations among hospitals, physicians and other providers is necessary and will result in better integration and improved quality for patients. But the evidence has shown that costs increase when providers come together and the state has taken a limited review of the pending changes, even though Massachusetts businesses and residents may be left facing fewer choices and higher prices in the future.

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Over the last three years, more than a half dozen state government reports, including landmark reports by the Attorney General, have shown increases in the prices doctors and hospitals charge for medical services, not how much care patients use or the quality of care they receive, remains the major factor for rising health care costs. As health insurance premiums reflect the cost of care, increased consolidation among doctors and hospitals could push prices higher.

At the national level, there is a growing body of research among policy experts that suggests that the growing movement by providers toward greater consolidation may not, in fact, lead to better care and lower prices. Instead, researchers have determined the opposite, concluding provider consolidation merely leads to enhanced bargaining power with no notable improvement in quality of care for patients.

This week, the newly-created Health Policy Commission will put the health care system under the microscope as it hosts a series of hearings to examine changes in where and how care is being delivered and what doctors, hospitals and health plans are doing to make health care better and more affordable. These hearings are an important opportunity for the Commission to take a closer look at the changes taking place in the Commonwealth, asking “How will provider consolidation benefit employers and consumers?” and “How do we ensure these changes don’t merely result in higher costs?”

The creation of the Health Policy Commission provided an opportunity for the state to begin taking a closer look at provider consolidation. But more needs to be done, because without sufficient checks on the system, there is no way to ensure that changes in the health care system truly benefit employers and consumers. A good place to start is with a set of common sense principles.

First, providers seeking to merge, consolidate or affiliate should explain exactly what systems they will put in place to reduce costs, enhance quality, improve efficiency, direct care to the appropriate and lowest-cost setting, and avoid unnecessary duplication of services, and be measured against those goals.

Further, the review process should be transparent, with the Health Policy Commission issuing a report outlining its analysis of all providers seeking to join together.

Finally, on an annual basis the Commission should review the status of the mergers, acquisitions and clinical affiliations it has approved to determine whether the benefits providers have given as the reasons for coming together, such as lower costs, better integration or improved quality, actually are occurring. Providers that fail to make good on the benefits they anticipated should be subject to enhanced review.

The provider consolidation taking place today will reshape the health care system for years to come. A system of continued accountability is necessary. It will help to ensure that we are getting a better health care system, not one that continues to be simply too expensive.

Lora Pellegrini is president and CEO of the Massachusetts Association of Health Plans.
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