Blurred Future of U. S. Health Care

Power-worship blurs political judgment because it leads, almost unavoidably, to the belief that present trends will continue.

George Orwell (1903-1950), Raffles and Miss Blandish, (1944)

December 13, 2011 - These days news of the future of health care's big transformations are coming fast and furious.

Why? Because pressures to cut costs are transforming business models. It is becoming survival of the biggest- a contest between bigger and bigger power-mongers. WSJ’s Anna Mathews says the future of health care is “blurred” – in the sense hospitals, physicians, are consolidating into bigger and bigger amorphous blobs. So amorphous, it’s hard to tell who is running the show.

If you’re big, amorphous, and dominate a market, you’re harder to push around, even by Big Brother. After all, patients have to get their care somewhere, and if you’re the only game in town, where are patients going to go? And what can government do? If present trends toward consolidation continues, you tend to believe you will have the power to negotiate the best deals. In the end, I suppose it will come down to Trust vs. Anti-Trust, and to the question: will govenrment be able to slay the monstrosities it created?

Anna Mathews of the WSJ describes the power of consolidation in a December 12 Marketplace Section of the Journal in an article entited "The Future of U.S. Health Care," with a subtitle of "The Lines are Blurring Between Insurance Companies, Hospitals, and Other Health-Care Providers."

She points out that:

• the percentage of 800,000 doctors who own their own practices will drop from about 50% in 2000 to 33% in 2013;

• hospitals are “bulking up” by acquiring other hospitals, with the number of acquisition climbing from 35 in 2002 to 82 in 2011;

• big insurers, like Aetna, are creating jointly marketed health plans with hospitals, in essence acting like integrated companies;

• accountable care organizations, made up health-care providers conjoined at the hip, are coordinating the care of defined groups of patients and sharing the savings - 15% of hospitals say they currently have an ACO in place, and that number may grow to 80% BY 2015.

• Insurers are buying health care providers at an accelerating rate.

-- On June 8, 2011, Wellpoint announced it would buy the CareMore Health Group for slightly less than $800 million;

--On August 31 the United Group’s Optum said it would buy Monarch HealthCare, a 2300 doctor association in California;

--On October 24, Cigna disclosed plans to acquire Medicare carrier HealthSpring for $3.8 billion;

--On November 1, Highmark announced a deal to acquire West Penn Alleghany Health System and said it would pump $475 million into the hospital group;

-- On some future date, Humana says it will buy SeniorBridge which provides care for complex chronic conditions.

So It Goes

And so the health care acquisition Merry-Go-Round goes. Where it stops no one knows. As one player observed, “Who knows? Right now, it’s all a blur.”

Building, bulking, bulging, and blurring into big boundary-less behemoths seems to be health care’s Master Plan “B.”

To "B' or not to "B", that is no longer the question.

Tweet: Lines are blurring between insurance companies, hospitals, and doctor groups as they bulk together to cut costs and dominate markets.