Sunday, January 31, 2010

Clash of the Titans

After Northwestern Memorial Healthcare closed its acquisition of Lake Forest Hospital in the posh northern suburbs of Chicago this past Friday, they have officially leapfrogged the geographic stronghold formerly held exclusively by NorthShore University HealthSystem (disclaimer: my employer, so I tread lightly). What this means for the health care market in the north Chicago suburbs remains to be seen, but there is no denying that competition for patients between the large hospital systems will be keen.

After all, someone has to pay the bills.

So what will the competition look like?

First, patients like all things bright and shiny. So look for plenty of new construction. Nothing like a tasteful, brass-laden lobby with plenty of open air space and windows to bring in their distinguished "consumers."

Second, plenty of advertising. Get the word out: there's a new kid in town. And their competition won't like this so they'll shout, too. As a result, money will flow freely to marketing and ad agencies. Look for these folks to profit handsomely from this deal.

Third, court the doctors. This is likely to be their most challenging endeavor. No doctor wants to travel 45 minutes (one way, in good traffic) from the Chicago Loop (site of the Mother Ship) to the posh suburbs and back again. What a waste of time. Still, specialists will be "encouraged" to make the road trip to provide "unprecedented" service to the suburbs. At first doctors who reside in the area will be tasked with supporting the expansion, but as the need for a backup cavalry of physicians to assist with call schedules takes hold, specialists will feel the strain. As a result, more high-priced doctors will need to be recruited. While this will be a snap due to the hospital's location, those specialists will pine for the conferences and academic niceties of the Mother Ship. Geographic realities will once again come in to play.

Local private doctors eager to sell their practices like new buildings with prestigious names, too. But some might not be as eager to work for a large corporate structure after having the independence of their own practice. Look for plenty of practices to demand a hefty price tag to assure a golden parachute to their more resistant senior practitioners as they consolidate with the Mother Ship. Look for the Mother Ship to be choosey as they try to cut costs.

Fourth, insurers ever-so-happy when hospitals compete for their patients, will find two stubborn health care systems with huge overheads (Lake Forest Hospital's $400 million price tag did not come cheap). They may not see as dramatic price improvements as they had hoped initially. Still, pressure for patients will ultimately prevail so the hospitals will have to "improve efficiencies" (i.e., not rehire staff and run lean and mean) to remain solvent.

Fifth, the "Northwestern Lake Forest Hospital" will have to have a unified electronic medical record system with downtown. This is no minor issue, especially when the Mother Ship has yet to consolidate under "one EMR roof" compared to their more local competitor. But the whole EMR story is increasingly becoming a commodity rather than a market differentiator and the difference between health systems will likely be short-lived.

The real challenge will be for patients, as its quite likely that the two EMR systems used by the health systems competitors will not communicate with each other. What a mess. But this issue alone might become the fault in the EMR-exclusivity tectonic plates that our computer specialists will have to resolve to avoid liablity for health care malfeasance.

All in all, its tough to see where costs will fall to patients in the short term. Maybe, just maybe, we'll see the affects of real competition on health care prices eventually, but just don't expect to see the affects anytime soon.


1 comment:

Keith said...

Let the fun begin!