Monday, January 20, 2014

Unscrambling  Obamacare and Hospital Consolidations: An Eggsplanation

The administration and its supporters in Congress will do all they can to mask the faults of this monstrosity and enable its survival, and they will further assert that bare survival is the new definition of success. Republicans should respond with measures that help voters see that Obamacare is neither inescapable nor irreversible​—​by saying no to the mandates, the bailouts, and the forced coverage cancellations that Obamacare requires to stay alive.

James Capretta and Yuval Levin,  “Unwinding ObamaCare,”Weekly Standard, January 17, 2014

Unwinding deals is exceeding difficult in practice: in antitrust vernacular, these efforts are labeled “unscrambling the eggs.”

Leemore Dafny, “Hospital Industry Consolidates- Still More to Come?” New England Journal of Medicine, January 16, 2014

Egg metaphors abound which apply to health reform:

·         Don’t put all your eggs in one basket, e.g., ObamaCare.

·         You can’t  make an omelet with breaking eggs, e.g, without disrupting the current structure and harming health care stakeholders and health consumers.

·         Don’t kill the goose that laid the golden egg, e.g., the health care markets which forms 1/6 of the U.S. economy.

·         He that would have eggs must endure the cackling of hens, e.g. ,  ideological politicians and their loyal  constituents.

·         Once you’ve scrambled eggs, you can’t put the eggs back together in their original condition, e.g. as stand-alone entities with individual shells of their own. 

·         Talking about health reform is like walking on eggs, e.g., people with a vested or special interests have fragile shells  that resist change.

Which brings me to the point of this blog:  it’s going to be very difficult  to unscramble or unwind ObamaCare.  It’s the law. It was hatched nearly four years ago.  Many of its provisions  and consequences  are already in motion – health exchanges, cancelling  of noncompliant health plans,  accountable care organizations,  shifts to part-time work to avoid penalties,  and physician and hospital consolidations  to protect the self-interests.

The Obama administration is doing some unscrambling of its own – by delaying the employment mandate and  enrollment dates and changing at least 20 other provisions of the law.   There is even talk of putting off the individual mandate – the very guts of the law – for a year.   

The administration is trying to consolidate and clarify and make its political position more palatable  and to save red-state Democrats before the November midterm elections.

Meanwhile Republicans are rolling out ads attacking the disastrous rollout,  government incompetence in overseeing the rollout,  ObamaCare’s harm to the economy and employment,  skyrocketing   premiums and deductibles,  and cancellations of health plans by health plans and employers.  In addition, they are coalescing around a more conservative national health plan as an alternative to ObamaCare.  

Hospitals  are reacting to the ObamaCare omelet by consolidating.  Hospitals are scrambling to fortify thier market positions,  improve operational efficiency, create new physician relationships, and  to manage and improve population health by offering better "value" and outcomes. . The  merger activity is impressive: 105 deals were reported in 2012, up from 50 to 60 annually in the pre-ACA, pre-recession days of 2005-2007.  Physicians in independent practice are unscrambling  and breaking up their practices by becoming hospital employees in record numbers. 

These two phenomena – hospital consolidation and physician employment  -  has produced regional hospital monopolies,  and price increases, not only hospital prices in general but particularly  prices of services of hospital employed physicians compared to physicians in private practice.   

Government anti-trust forces are aghast at these burgeoning monopolies with the attendant price spikes and are examining Accountable Care Organizations  to see if the violate anti-trust rules.  There is an irony to these antitrust concerns over ACOs.  ACOs are organizational creatures created by  the health law.

Physicians who felt left out of the ObamaCare and hospital omelets are taking risks  walking on financial  egg shells by forming concierge practices, dropping  3rd parties, including  new Medicaid and Medicare patients,  to exert their independence, circumvent government bureaucratic rules,   protect their clinical autonomy,   secure their incomes,  decrease their overhead, and offer greater service to their patients.  

Tweet:   Efforts are underway to unwind the health law and to protect against its effects through hospital-physician consolidation and by forming concierge practices.

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