Consolidation of doctor-owned hospitals seemed like a good thing when they first began to cut costs and eliminate redundancies. But pitfalls are popping up and they’re not inconsiderable.
According to Andis Robeznieks, the newest threat to physician-hospital ownership “is market consolidation that has led to hospitals aggressively pursuing medical specialists,” quoting a speaker at the 12th annual conference of the physician-owned hospital trade association, Physician Hospitals of America, recently held in Austin, Texas.
“The lifeblood of physician-owned hospitals,” said Kevin McDonough, a senior manager with Dallas-based consultant VMG Health, “is specialists.” And physician-owned hospitals are facing a growing inability to replace aging physician investors and recruit new doctors to their ranks, Robeznieks reported.
“Herd mentality” was another phrase heard at the conference. Robeznieks revealed that Clinton Flume, a manager with VMG, said consolidation is being driven in part by a “herd mentality,” where one hospital is seen as “gobbling up practices” and competing hospitals become motivated to do the same.Physicians are also driving consolidation, Flume said, as they seek employment as a way of being shielded from market forces, including reimbursement cuts – especially for cardiologists – and increasing costs for malpractice insurance and information technology.
But that doesn’t seem to be stopping the forward motion of these kinds of arrangements.
The financial demands of healthcare reform and the ongoing transformation of the industry are pushing providers to work more closely together, and in some cases, seek out partners with which to merge, experts say, according to Crissa Shoemaker DeBree.
And in Massachusetts, two new networks would be formed to allow physicians and hospitals an alternative to accountable care organizations (ACO), if talks between Tufts Medical Center, Vanguard Health Systems and a physician network in Massachusetts continue.
The organizations are in talks to develop a joint venture that would provide a flexible alternative to hospitals looking to join a larger health system.
Edited by
Braden Becker
