Consolidation of healthcare is not an island unto itself

Since 2005 I’ve written hundreds of thousands of words about healthcare. This includes 14 books I’ve authored, co-authored, and/or published. Never once, however, did I mention how the consolidation of healthcare into ever-larger organizations patterns what is happening all across America.

The GOP presidential debate included mention of the Dodd-Frank legislation that affects the banking industry. Candidate Jeb Bush told the story of a small community bank located in Washington, Iowa. The bank, with its $125 million in assets, struggles to stay in business because of Dodd-Frank. Why? Because of thousands of pages of regulations and an onerous compliance cost that grew from $100,000 a year to more than $600,000 per year.

It is likely that the community bank to which Bush referred will eventually be absorbed by a large banking system, which in turn, will be absorbed into a national or even international bank. Will the local communities that rely on these small banks be better served by $2.5 trillion behemoths like J.P. Morgan bank? U.S. Bank? Wells Fargo Bank?

When Congress passed The Health Insurance Portability and Accountability Act of 1996 (HIPAA) it added volumes of compliance requirements on medical providers, insurance plans, and related support industries. “Ma and Pa” pharmacies too often could not afford to upgrade to meet the compliance costs, and either went out of business or sold to larger chains of stores.

The Affordable Care Act of 2010 (aka ObamaCare) is having the same effect on medical practices. True enough, the consolidation trend predated ObamaCare as a response to managed care, HMOs, and the like, but the ACA exacerbated this problem. Now we are told that Bigger is Best and we will get better, more affordable care from huge health systems.

We will be coming to know these new health systems over the next few years. Accountable Care Organizations, hospital-owned practice groups, insurance-company owned practice groups, and the like, will provide the bulk of healthcare services to individuals. Healthcare management is moving away from the beside, between a doctor and the patient, to the backrooms where actuaries and accountants decide how to divvy up healthcare dollars. This is the trend.

Today, most patients do not hire doctors to provide their medical care – they “hire” an ACO, HMO, PPO, or in many ways, an Electronic Health Record, to provide care. Whether this proves to be more effective or efficient can only be evaluated over time and in terms of reduced quality healthcare. But for many, a reduction in quality means an increase in pain and suffering, and premature death.

Here’s the rub: Consolidation of banking, health data, healthcare services, and such, exposes new flaws and failures. When this happens, Congress and the regulators step in to further consolidate the failed consolidation. Seldom, if ever, will decentralization result. Too bad. For us.

Some patients, like me, still do hire their doctors. I hired a St. Paul internist to provide my primary care. Mr doctor does not accept insurance or government health plan reimbursements. He is in a Direct Pay Independent Practice model. His electronic health record serves my needs, not the needs of mega-health providers or government agencies. Did I mention that on December 24, 2012, he saved my life?


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