Contrarian CEO: Consolidation Will Hike Spending

Philip Betbeze, August 23, 2013

Consolidation in the healthcare industry will do nothing to stop the upward march of spending. In fact, consolidation should exacerbate it. So says a hospital chief in a major market who shall remain anonymous—for now.

I talked to a CEO this week who has some surprising opinions about the overriding result we'll see from the wave of consolidation that's sweeping through healthcare.

Though improvements in quality of care and care coordination, as well as elimination of waste, are often the first benefits cited by CEOs who are attempting to put a hospital or health system merger together, this guy happens to think those are all secondary. In short, he thinks it's mostly about the profit motive and regional monopolies.

Take that, Federal Trade Commission. Here's one hospital CEO who says consolidation is going to do nothing to stop the inexorable march of healthcare spending higher and in fact, should exacerbate it.

This CEO, who will remain nameless until our 2013 HealthLeaders 20 are unveiled in December, reflects but one opinion among many differing ones in healthcare, and indeed, his opinion is shaped by his own local market, where the variables that determine reimbursement are as different from one area to another as annual rainfall amounts.

His opinion is also shaped by the fact that he is, relatively, as head of a standalone hospital in a major market, a minnow swimming in a sea of barracudas, and trying to compete for a slice of the same reimbursement pie—at least on the commercial side.

Philip Betbeze

Philip Betbeze is the senior leadership editor at HealthLeaders Media.

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