Sunday, April 18, 2010

When All the Cardiologists Merge with a Single Hospital

Is competition or consolidation is the best way to deliver care and contain costs in the post-reform business of health care?

In Maine, the state Legislature has maintained that competition should prevail:
Under the plan, MaineHealth, owner of Maine Medical Center, would hire the 40 cardiologists now with Maine Cardiology Associates, which is based in South Portland, and Cardiovascular Consultants of Maine, based in Scarborough. The doctors would continue to see patients at their existing offices with the same medical and support staffs, although MaineHealth would buy the offices and equipment.

MaineHealth and the physician groups asked for a change in state law that would protect the deal from antitrust challenges if they can show it is in the public interest – for example, that it preserves access to high-quality heart care.

That effort failed in the closing days of the legislative session, however, and it’s unclear whether MaineHealth and the cardiologists will move ahead and risk legal challenges, or wait and try again when the Legislature reconvenes next winter.

“We’re assessing our different opportunities to move forward. We’re still fully committed to our integration,” said Mark Harris, spokesman for MaineHealth, a nonprofit that owns seven Maine hospitals and several other health care organizations. “It would be in our best interest and in the best interest of the state, as well.”

Mercy Hospital in Portland and Central Maine Medical Center in Lewiston have objected to the change in state law. Officials with those hospitals also say the merger would effectively give Maine Medical Center a monopoly in cardiac medicine that could harm competitors and patients.

Both the Federal Trade Commission and the Maine Attorney General’s Office have been monitoring the plan because competition – at least in theory – leads to better services and lower prices, and the deal could threaten that.
While the theory of competition to control costs works in free markets, health care is anything but a free market. As proof of this, competition between hospitals has failed to lower costs in most other health care markets nationwide.

Somehow, I don't think the Maine legislature really believes their theory that competition is the best way to control costs in health care. Rather, what this anti-trust argument really boils down to is the legislature does not want to lose two other hospitals (and the taxes and jobs they represent) to market consolidation.



Keith said...

It is the disparities in payments for some medical services that makes this a potentially bad deal for the citizens of Maine. Most hospitals need to have a strong presence in the cardiology and orthopedic areas of health care, since these are the high profit parts of the health care system. To let one hospital suck up all the cardiac care will cripple the others competitively, although consolidation might bring more efficincies. Once one hospital dominates the cardiac care market, they also make themselves indispensable and likely to extract higher prices for all their services. Also, cardiac services are a time sensitive service where time from onset of chest pain to the cath lab is very important. Consolidating these services at one institution may drive up travel times for some residents and negatively affect outcomes.

All in all, sound like a bad idea for this type of consolidation to occur. this is no diffrent than the concept of cardiologists building their own specialty hospitals, which has the same effect of robbing full service hospitals of a service that often funds alot of undercompensated services at hospitals.

Anonymous said...

Leaving aside the cost considerations, I wonder about the quality-from-consolidation arguments that are often made in this context. I would imagine that if both parties are truly committed to it, the quality benefits of coordination can be achieved without requiring acquisition.