Healthcare Reform Then, and Now

This article appears in the October 2012 issue of HealthLeaders magazine.

Longtime veterans of healthcare can easily remember a previous time of intense change in healthcare in the form of managed care in the 1990s.

"The approach was, we'll buy them and they will become engaged, and we know how to run them because we run a big hospital," says Brent Wallace, MD, chief medical officer at Salt Lake City–based Intermountain Healthcare.

That experiment ultimately didn't work out too well for many hospitals and health systems as it became apparent that many of them overpaid for the practices they did acquire, and both patients and physicians rebelled against managed care and its blanket preauthorization rules.

"Hospital folks don't have the skills to manage that effectively," he says. "For that reason, hospitals lost bucketloads of money and many divested practices they had acquired. We didn't do that. We set up a totally separate management structure, and because of that, although we sustained some losses, they were not nearly to the same degree as most organizations."

He says hospitals are following that lead this time as they acquire practices.