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An Interesting Unintended Consequence of Obamacare


 The Obama administration has encouraged local hospital systems
throughout the United States to consolidate physicians practicing in their

Hospital systems have found this attractive. There has been a
movement to buy physicians’ practices and then pay physicians a salary.
has been encouraged by the Obama administration because someone in the
administration believes this will encourage physicians to stop over testing.

Hospital systems love it because they understand that brick and
mortar facilities are not worth as much as they use to be. If they own
physicians’ intellectual property in the form of primary care physicians and
skills in the form of surgeons, the value of the hospital system increases. 

It has not worked out as well as many hospital systems would
because when physicians worked for themselves they were more productive
than when they worked for the hospital system.

The Obama administration also believes that it can bundle the
payment of a treatment and share the savings with the hospital system if the
treatment costs less. If the treatment uses more assets and costs more the
hospital system will not be paid.

In other words, the government and the healthcare insurance
industry want to offload the risk of treatment to the hospital system. They
administration thinks this will force hospital systems to deliver a better
quality of care. You may recall quality of care has not been defined

The example often used is the non-payment for hospital
readmissions within thirty days.

This policy doesn’t work because reasons for hospital
readmissions are multifactorial. Many of those factors are uncontrollable. One
hospital system can also divert the patient to another hospital system or treat
the readmitted patient in the emergency room.

The Obama administration is encouraging Accountable Care
. There are so many problems in forming, administrating and
managing ACOs that they are destined to fail.

Anyone reading the administration’s propaganda would not think
so, but it is true, and as time goes on it will become apparent.

Finally, hospital systems and physician groups are realizing the
negotiating power they are accumulating by consolidating and integrating
physicians’ practices.

Consolidation is not good
for the patients. It is great for the hospital system and the large independent
physician specialty groups. Physicians who have sold their practices to
hospital systems will not do so well because the hospital systems are in
control of the collections and salaries.

Large medical specialty groups are negotiating with Obamacare’s
new healthcare plans. These providers are demanding, and in some cases
securing, pretty rich reimbursement rates from the new Obamacare health plans.

It is the same thing that happened in the 1980’s when HMOs
negotiated high reimbursement deals with medical and surgical specialists the
HMO wanted in the group.
The HMO’s reasons were to promote the HMO’s brand and
to get better medical results for the patients they had enrolled.

“To take care
of patients that will be covered by the new insurance scheme
, these providers
are requesting payment rates that are higher than what they're being offered by
Medicare. Some providers are even insisting on premiums over what they're paid
by the existing private, employer-based health plans.”

Hospital systems in a town they dominate are doing the same
thing. The result will be an increase in the costs to the government and the
healthcare insurance companies. They will pass the increased costs on to the

“Some of the
Obamacare plans, stuck in markets where there are few competing groups of
providers to choose among, are being forced to accept these high prices.”

The Obama administration told us, at the passage of Obamacare,
that providers would be discounting to get the volume of business that
Obamacare offered as the new legislation banded large groups of patients into
statewide insurance pools.

The defective central premise was that Obamacare would entice
providers to take lower reimbursement because of increased volume.  

“The people
that now seem most likely to enter these state-based insurance pools, and buy
the new coverage, represent a costly mix of patients with a lot of pre-existing
medical conditions. The volume is also unlikely to materialize.”

Obamacare has tripped over its central premise. It is not going
to lower costs. It is going to raise costs.

Obamacare has stimulated the consolidation of hospitals and
physician groups that's now rampant in healthcare. This consolidation is
starting to give providers leverage over Obamacare’s health plans.

This unintended consequence of Obamacare was obvious to most
healthcare policy thinkers who believe that control and planning do not work.
Unfortunately, President Obama did not listen to them.

The other thing President Obama did not listen to is that Health
Maintenance Organizations (HMO’s) of the 1980 and 1990s did not work. Obamacare
is a HMO on steroids

 “Under the scheme, doctors are paid lump sums of money to care
for large groups of patients.

The idea is to put the financial risk on the doctor for the
cost of the medical care that they deliver
. This was a central premise for how
Obamacare would put financial pressure on providers as a way to help to lower
healthcare costs.”

Physicians and Hospital Systems have been to this movie before. 

Hospital Systems are making believe they are taking Obamacare’s
financial bait. They are using the concept to frighten physicians and buying
local medical practices.

Hospital systems’ goal is to get a geographic monopoly then take
advantage of the negotiating monopoly. Physician groups especially specialty
groups will stay independent of hospital systems, integrate practices and get
in a negotiating reimbursement.

This will increase the cost of medical care. Everyone knows all
healthcare is local. Central control of healthcare is innately flawed. 

This is one of the many defects in Obamacare’s structure.

Obamacare has dismantled the last vestiges of local competition
among physicians for patients.

Now Obamacare will have to deal with the physician and hospital
system cartels it has created.

 The victims in all of this are patients
and the cost of patient care.

The Obama administration’s public service campaign is starting
to sell Obamacare’s virtues to young people through the NFL, NBA and major
league baseball. It is also signing up non suspecting consumers at supermarkets and churches.

Good luck. I think everyone is starting to catch on.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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