April 28, 2015

The opponents of Medicaid reform with managed care are pushing a plan allowing Accountable Care Organizations or ACOs to control Medicaid service delivery. ACOs are large combinations of doctors and hospitals.

But by encouraging healthcare consolidation like ACOs, are we going to snuff out competition and raise costs by creating medical monopolies?

The LA Times reports consolidating physician practices under hospital ownership leads to less competition and higher costs for medical care. They write “Raising fresh questions about healthcare consolidation, a new study shows hospital ownership of physician groups in California led to 10% to 20% higher costs overall. Total spending per patient was 10.3% higher for hospital-owned physician offices compared with  doctor-owned organizations, according to the study.

Costs were even higher when large health systems running multiple hospitals owned medical groups. Their per-patient spending was 19.8% higher compared with independent physician groups.” (LA Times)

A Wall Street Journal piece (4/20) says “Health-care conglomeration aligns with the Affordable Care Act, which created incentives for physicians and hospitals to work together in accountable care organizations.” There were Ninety five hospital mergers last year as ObamaCare makes the big bigger. (WSJ)

North Carolina’s Certificate of Need (CON) law already restricts the ability of new entrants into the medical marketplace from competing with current providers. Do we really want to empower ACOs to further turn healthcare into a price raising cartel? Managed care is the better way to reform Medicaid.