Too much provider consolidation leads to higher healthcare costs, expert says

Share this article:
Poor oversight allows nursing home workers to plunder residents' trust funds, investigation finds
Poor oversight allows nursing home workers to plunder residents' trust funds, investigation finds

Healthcare providers are increasing coordination to reduce the cost of care, but overly zealous consolidation can actually end up costing more, an expert panelist said at a Monday briefing.

Hospitals, nursing homes, assisted living facilities and other providers that join to create large, consolidated structures like Accountable Care Organizations wield significant pricing power in their local markets, said Robert Galvin, CEO of Equity Healthcare at the Blackstone Group.

Galvin was speaking at an Alliance for Health Reform event in Washington, D.C. Consolidation has driven payments to hospitals up about 3% on a nationwide basis, he said, citing a November 2012 report from the group Catalyst for Payment Reform. Metropolitan areas in particular have seen high levels of consolidation and consequent price increases, with mergers in the San Francisco Bay Area driving prices up nearly 40%, the report stated.

Coordination can control costs, but Galvin said problems occur when “appropriate consolidation becomes too much consolidation.” He expressed support for many of the remedies proposed by Catalyst for Payment Reform, such as improving pricing transparency and encouraging large private companies to pursue direct contracting with providers. Direct contracting might bring prices down by leading providers to innovate payment structures to win business. Antitrust regulation should also be considered, Galvin said.

Care coordination may be experiencing some growing pains, but ACOs are on the rise. Many operators see long-term care as crucial to ACOs' success in reducing rehospitalizations and extended hospital stays.

Share this article:

More in News

Bill addressing admission status receives praise

A bill that would require hospitals to give patients a formal notice of their admission status has received strong support from healthcare associations.

Increased 'bed taxes' on nursing facilities warrant stricter federal oversight, report states

States have been increasingly taxing skilled nursing facilities and other healthcare providers to fund Medicaid in recent years, and federal authorities should look more closely at this trend, according to a government report released Tuesday.

Last chance: Tech Awards deadline arrives

Last chance: Tech Awards deadline arrives

There are hours left for innovative long-term care providers to enter the third annual McKnight's Excellence in Technology Awards. Submissions will be accepted until the stroke of midnight tonight.