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The Changing Health Care Landscape

By Melinda Reid Hatton
April 17, 2015

Today’s report by the National Academy of Social Insurance (NASI) is a worthy attempt at a more balanced look at health care markets.  Unfortunately, it assumes the past is prologue with only glancing notice of the forces that are dramatically changing health care.  NASI’s pricing study focuses on hospitals nearly to the exclusion of commercial insurers, pharmaceutical giants and others in the health care arena that add to its cost beyond perceived value.  And yet, hospital price growth is at historic lows, a fact the report dismisses by claiming that’s just too good to last in an era of consolidation.  Authoritative sources might beg to differ:  the most recent Altarum Institute report found “very low hospital price growth despite waves of consolidation.”

And, a new study by a noted economist and health care authority concludes that there is no simple statistical link between hospital prices and concentration – the story is just more complicated than that simple platitude. While noting some of the forces changing health care, the study nonetheless assumes that hospital realignment is about cementing the past not preparing for the future.  It mostly dismisses the need for realignment to better coordinate care despite all the available evidence that coordination is exactly what consumers want and expect and what private and public payors demand.  The Department of Health and Human Services announced plans to move half its Medicare payments to alternative payments that require “providers to make fundamental changes in their day-to-day operations.”  HHS also dismisses as a compelling reason for realignment many hospitals’ desperate need for capital.  Without it, how can the field be expected to move to a future in which coordination is dependent on new and expensive technology, such as electronic medical records?  Case in point:  for the past three years (2010-13) hospitals spent an average of $47 billion on IT. 

Looking at healthcare through the rear-view-mirror is unfortunate; assuming the hospital field is doing the same is nonsense.

Topic: Access and Coverage
Tags: Medicare, Coverage, access, price

Melinda (Mindy) Reid Hatton is the General Counsel and Senior Vice President at the American Hospital Association.

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