Hospital Mergers Save Money?

Remember when you were told how great it was going to be when hospital systems merged?  Remember they were going to negotiate with insurers and other third parties to bring prices down?  Ummmm……not.

But an analysis conducted for The New York Times shows the opposite to be true in many cases. The mergers have essentially banished competition and raised prices for hospital admissions in most cases, according to an examination of 25 metropolitan areas with the highest rate of consolidation from 2010 through 2013, a peak period for mergers.

Now, where do you think all that “saved” money went?

Want more?

But not only have big consolidations continued, the behemoths have further cemented their reach in some regions of the country by gobbling up major doctors’ and surgeons’ practices.

I am sure that gobbling had nothing to do with the “facility fees” they were able to charge.

Listen, monopolies are bad and the worst part of the free market and capitalism.  But is it really the free market or capitalism?  I don’t know the answer to that.  I do know that these mega-mergers causing mega-monsters are a problem.  Who has an answer how to stop it?

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Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  6 comments for “Hospital Mergers Save Money?

  1. Kris Ray
    November 22, 2018 at 7:33 am

    Need some training atleast in residency about opening own practice, manage business and marketing. Think MDs are smart but we are much dumber when it comes to above, let’s say compared to dentists. Most residents have no clue how to navigate the business side. They are kinda brainwashed to look for a ‘job’ and the hungry behemoths are ready to hire them. Root cause could be a lack of entrepreneurial spirit strong enough to create pockets of competition and innovation. Should start in Med school and residency. If not, Dr.Farrago, let’s design a course for them to encourage it!

  2. bbneo
    November 21, 2018 at 5:07 pm

    Everything old is new again.

  3. November 21, 2018 at 4:52 pm

    Eau contraire. It has everything to do with “facility fees.” When those go away, hopefully soon, then there will be more doctors looking to establish direct pay practices.

    Fortunately, CMS is heading that direction by implementing site neutral payments for E&M codes starting January 1.

    Next step, facility fees!

  4. Randy
    November 21, 2018 at 1:53 pm

    I don’t know that it can be defined as capitalism or a free market when the government has actively taken steps that put small private practices at a disadvantage to huge corporations.

    • JRDO
      November 21, 2018 at 2:11 pm

      Agree. Unfortunately (depending on one’s political ideology) it is also only the government that is empowered to fix it. Consumer friendly measures such as getting rid of facility fees, monopoly busting, putting price limits on patent protected medications, etc, all requires the government to act against the interests of big business. It’s not likely to happen.

    • RSW
      November 21, 2018 at 3:28 pm

      The government has “taken steps that put small private practices at a disadvantage” because they were told to do so by the huge corporations – the best regulatory and legislative systems money can buy.

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