Does coordinated care also drive up its cost?

The desire to better coordinate the delivery of healthcare services may also drive up the cost of that care, Bloomberg Businessweek reported.

Many hospitals try to better coordinate care by merging with one another, or acquiring medical practices, according to Businessweek, even though data suggests it has a negligible impact on quality and outcomes.

However, such an act also gives providers more clout in dictating prices. For example, 2012 research from the Robert Wood Johnson Foundation suggests that consolidating hospitals leads to higher prices, and that hospitals seek medical practices for enhanced bargaining power rather than to improve care.

Nevertheless, mergers and acquisitions in the healthcare sector are on the rise. And for-profit providers also enjoy better value creation than not-for-profit hospitals.

Accumulative providers such as Partners Healthcare have become behemoths, collecting 28 cents of every dollar that is spent on healthcare services in Massachusetts and becoming the state's largest employer through a series of mergers and acquisitions, according to Businessweek. Although Partners' management said it strives to coordinate care, it was recently prodded by state regulators to cut a deal on the prices it charges for services to the overall rate of inflation until the end of this decade.

State and federal regulators are now more involved with deals elsewhere in the country, such as Phoebe Putney Health System in Georgia and St. Luke's Health System in Idaho. As a result, some academics suggest that hospitals and healthcare systems look for other ways to coordinate care.

"Lots of mergers happen that don't lead to greater coordination, and there are ways to achieve coordination without mergers," Paul Ginsburg, a professor at the University of Southern California's Schaeffer Center for Health Policy and Economics, told Businessweek. "The higher prices for many mergers could be an order of magnitude greater than savings from coordination."

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