Tuesday, September 22, 2015

How Big and How Consolidated Is Health Care Going to Get?

In a book I’m not writing, The ObamaCare Legacy, I assert the principal hallmark of ObamaCare will be that it provided the spark leading to massive consolidation of the health care industry.

In today’s September 22 WSJ an article appears, “ Health Law Speeds Merger Frenzy” that affirms my assertion. The lead paragraph reads, “Five years after the Affordable Care Act set off a health-care merger frenzy, the pace of consolidation is accelerating, transforming the medical marketplace into a land of giants.”

And giants the insurers are becoming. The proposed mergers of Aetna-Humana, Anthem-Cigna, and the presence of UnitedHealth Group would signify the existence of 3 massive companies, each with revenues of over $100 billion.

the hospital front, in 2015, 71 mergers have occurred before the end of August. Last year there were 100. Hospitals claim they must merge to gain the scale and heft to compete, to constrain costs, and to meet quality and efficiency goals imposed by ObamaCare. They must add other hospitals to their systems, acquire doctor practices, and add a wider range of services to stay in the game, and to meet the demands of growing doctor groups, who are says, “Take my rates or you’ll have no network.”

The buzzwords are you have to be "horizontally and vertically integrated" to survive and thrive. They claim they have to get bigger to squeeze out costs, end duplicative services , and end waste so they can “coordinate care across the entire continuum and partner with providers to provide proven value.” Never mind that in the short run costs for physician services have gone up to offset the costs of acquisition, management, and adding new outpatient facilities.

As Doctor Suess said in Lorax,

Business is business!

And business must grow

regardless of crummies in tummies, you know.

I meant no harm. I most truly did not.

But I had to grow bigger. So bigger I got.

I biggered my factory. I biggered my roads.

I biggered my wagons. I biggered the loads.

And I’m figuring

On biggering,

And biggering,

And biggering.

Add to these figures the facts that health care is already a $3 trillion industry, that Medicare’s unfunded liabilities are now in the $100 trillion range, and that it would cost $15 trillion to offer Medicare-for-all, and you begin to wonder how much bigger and biggering health care can get.

What is to become ObamaCare’s legacy,

Is it first and foremost a progressive fantasy,

Can our children afford its projected destiny,

Is massive consolidation the only remedy?