Healthcare consolidation, ACOs questioned on Capitol Hill

Congressional members at a House Ways and Means health subcommittee hearing on Friday were skeptical of the possible side effects of healthcare consolidation and accountable care organizations under health reform, reports The Washington Times.

"I recognize that, at least in theory, consolidation can lead to greater efficiencies and improved outcomes," said Rep. Wally Herger (R-Calif.), chair of the health subcommittee of the House Ways and Means Committee. "Unfortunately, research has shown that higher prices are more often the result."

With hesitation about possible market dominance, some congressional members argued that consolidation of hospitals, providers, and insurers would create higher hospital prices or allow providers to demand higher reimbursements from private insurers, according to the Times article.

"Unless we get a grip on the incentives system, we're going to be spinning our wheels," said Rep. Ron Kind (D-Wis.). "We're not going to change how we pay for one-fifth of the economy overnight, but that has to be the goal."

For better or for worse, accountable care organizations are often lumped into the consolidation discussion. As hospitals, providers, and insurers join forces to align incentives under accountable care via health reform, the regulatory agencies have kept a watchful eye with recently boosted efforts against anticompetitive behavior of mergers and acquisitions.

Professional groups have commented with mixed responses.

The American Hospital Association (AHA) commended the Department of Justice's Antitrust Division's role in preventing anticompetitive conduct, according to a Friday statement. However, the AHA said, "For all the reasons that collaboration is good and fragmentation is bad, we believe that mergers and consolidations can be helpful."

The American Medical Association (AMA), on the other hand, criticized the high concentration of health insurance markets, while arguing that current anticompetitive rules prevent physicians from coordinated care, thus threatening patient care, according to an AMA press release. "Existing antitrust policies allow significant consolidation in some areas of our healthcare system while overly restricting the coordination of care by physicians," said AMA President Dr. Peter W. Carmel in a press release. "It is time to update these policies to allow physicians in all practice sizes the ability to lead and participate in innovative new models of care while protecting patients from anticompetitive practices."

Paul Ginsburg, president of the Center for Studying Health System Change (HSC) and research director of National Institute for Health Care Reform, pointed to rate reviews as a possible solution and predicted that consolidation may be settled by the states. "The alternative to market forces is rate review or rate setting by a public entity. This is much more likely to develop at the state rather than the federal level." He continued, "If there is to be a market solution to this problem, it will have to address both the issue of consolidation and engage consumers in ways that they have resisted before."

For more information:
- read the Washington Times article
- read the AHA news brief
- read the AHA statement (.pdf)
- read the AMA press release
- read the AMA statement (.pdf)
- read the HSC statement

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