physician-hospital consolidation: the good, the … consolidation: the good, the bad, and the...
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Physician-Hospital Consolidation: The Good, the Bad, and the Solution
James C. RobinsonLeonard D. Schaeffer Professor of Health Economics
Director, Berkeley Center for Health TechnologyUniversity of California, Berkeley
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Closer alignment between physicians and hospitals offers great potential advantages
What are the virtues of consolidation?
Better scheduling and use of inpatient capacity
Better collaboration on quality and safety
Better discharge planning; shorter LOS
Better supply chain purchasing
Less duplication of ambulatory services
Shift from bed-focus to population-focus
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Alignment is most obviously accomplished by organizational merger and physician employment
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What are the vices of consolidation?
Physician-hospital consolidation…sometimes falls short of the promise of efficiencycan create higher prices than competitive marketscreates large integrated delivery systems which can be complex, slow-moving, defensive, and costlymay stifle innovation which often occurs in smaller, newer organizations
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What do the data say?
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Total Cost of Care per Patient in Physician Organizations in California
JC Robinson, K Miller. Total Expenditures per Patient in Hospital-Owned and Physician- Owned Physician Organizations in California. JAMA 2014; 312(16):1663-69
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What are possible solutions?
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Growth of High Deductible Health Plans in the Employment-based Insurance Market
Percentage of Covered Workers Enrolled in a Plan with a Deductible of $1,000 or Morefor Single Coverage
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High Deductible Health Plans in California’s Health Insurance Exchange
Metal Level Subsidy Eligible Unsubsidized Total
Bronze 24% 36% 26%
Silver 66% 30% 62%
Gold 5% 13% 6%
Platinum 4% 14% 5%
Total Enrollment 1,222,320 173,609 1,395,929
Source: Covered California enrollment, 10/1/13 – 3/31/14.Data includes individuals who finished applications and selected plans through April 15, 2014.
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National Prevalence of Narrow Networks
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An explanation: Reference Based Benefits (RBB)
Sponsor establishes a maximum contribution—reference price—it will make towards paying for a particular service or product
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Patient has good coverage for low-priced options but full responsibility for choice of high-priced optionsRBB has been applied to inpatient procedures, ambulatory procedures, imaging, lab tests, drugs
Reference Price
This limit is set at minimum or median of the price range charged by comparable providers
Provider (A) Price
Patient must pay full difference between this limit and the actual price charged by the provider
Patient “chooses” cost sharing by choosing provider
Provider (B) Price
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Can plans and providers collaborate for efficiency and price moderation?
Center the network around major hospital systems, but agree on price and cost targets to achieve market-driven premiumsAnthem Blue Cross and UCLA Medical Center
Put medical groups and IPAs at the center of broad PPO networksAnthem PPO and Brown & Toland Physicians
Vivity Model ACO Model