HLM: Is there an overarching reason that is pushing healthcare consolidation/integration?
Mostashari: There are payment policies in particular that are literally distorting the economics of healthcare such that they push small and independent practices into employment or other owned arrangements with consolidating health systems.
The shining example of this is when a private practice cardiologist is bought by a hospital so they can re-categorize it as a hospital outpatient department. All of a sudden, for the same service delivered by the same person in the same facility, Medicare and other payers following suit will pay two or three times for that echocardiogram as would have been done in a private practice office.
That is a distorting factor.
HLM: Is government policy the biggest driver of consolidation?
Mostashari: As a former regulator, I absolutely do not believe that there is a federal policy to encourage consolidation. The consolidation is an unintended consequence of some policies. And this is our whole point here.
Every policy needs to consider its implications on competition. To this point, we don't think that many well-intentioned, intelligent people who are addressing policy in their domain are not doing it with an eye toward its impact on competition, and they need to do so.
Gaynor: There is not a federal policy that is designed to promote consolidation. It's just that sometimes there are policies that are designed for a completely separate purpose that unintentionally have that result.
You don't need to consolidate to take risk-based payments. You don't need to consolidate to coordinate care. As a matter of fact, sometimes it can be done more efficiently by independent entities.
There is the possibility of virtual groups, where policy can facilitate independent practices to come together in a virtual way so that they don't have to consolidate under one ownership to take risks or comply with a certain requirement that is coming down from CMS or other payers.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.