Hospital consolidation hearing sparks debate on healthcare law’s merits

Friday’s hearing on what to do about hospital consolidation and the high healthcare prices that result quickly turned into a partisan debate on whether Democrats’ healthcare reform law is helping or hurting.

Wally Herger (R-Calif.), chairman of the Ways and Means Committee’s health panel, opened the hearing by arguing that in many ways the law “has made a challenging situation worse” by pushing providers to merge together in an attempt to “blunt the impact of the law’s one-half trillion dollars in Medicare cuts and massive new regulations.”

“Providers unable to absorb the cuts are prime candidates to be acquired by larger providers who can,” Herger said. “Large insurance plans that are able to comply with the new regulations are likely to buy smaller plans that cannot. Providers teaming up [under the law] are likely to be able to command higher private insurance rates whether or not” they’re successful.

{mosads}The subcommittee’s ranking member, Rep. Pete Stark (D-Calif.), poked Republicans for holding a hearing on an issue that has long worried Democrats.

“It is refreshing to see our majority raise concerns about competition in the marketplace and how it may result in outcomes that are bad for consumers and for Medicare,” Stark said. “As we work to develop a more integrated, outcomes-focused healthcare delivery system, this issue of consolidation will be ongoing. It is certainly important that we keep a close eye on it and I applaud my Republican colleagues for agreeing that this is an appropriate role for our government.”

Rep. Charles Boustany (R-La.), a cardiovascular surgeon and chairman of the Ways and Means oversight panel, said the healthcare law focused too much on getting doctors and hospitals to work together and not enough on the potential downsides.

“The real danger is, you need a certain type of integration to occur, but you still need to assure that there’s competition,” Boustany told The Hill. “And I think the path we’re on is one of consolidation without competition and that’s going to be a real problem.”

He said he intends to shortly unveil legislation providing “statutory relief and clear boundaries” so physicians can integrate with hospitals “while maintaining a separate identity as a group.”

“I’m very concerned about the erosion of independent physician practices,” Boustany said. “I think it creates all sorts of conflicts of interest when you have physicians on salary at hospitals. 

“We have to see what models emerge and work best but there are certain impediments right now in federal law … and I think there has to be statutory relief in that regard,” he said. “Physicians ought to be able to band together (but) you have to knock down the current federal barriers that are in law to allow these kinds of integrations to occur.”

Committee member Sam Johnson (R-Texas) also jumped on the hearing to continue pushing for his legislation to repeal the healthcare law provision banning the development and expansion of physician-owned hospitals.

Witnesses testifying at the hearing had varying takes on the law’s effects.

David Balto, a senior fellow at the liberal Center for American Progress, pointed out that the law turned conventional antitrust thinking on its head by pushing for more integration between providers to avoid duplication and boost quality. At the same time, he says, the law does contain tools to increase competition, such as health insurance exchanges and insurance rate transparency.

Balto also praised physician-hospital collaborations called Accountable Care Organizations, but said regulators should worry about their market share. One solution is to avoid giving hospitals too much power at a time when more than 90 percent of Americans live in “highly concentrated” hospital markets where hospitals can demand high prices from healthcare plans — and their customers.

“It’s time for the [Federal Trade Commission] and the [Department of Justice] to adjust antitrust standards so docs can band together too,” Balto said.

The Coalition for Affordable Health Coverage, for its part, offered several steps Congress could take to start addressing healthcare industry consolidation:

• Require the Centers for Medicare and Medicaid Services to measure local market concentration;
• Enforce existing antitrust law, including through retroactive enforcement to deconcentrate existing markets;
• Modify antitrust laws to permit the supervised collusion of payers such as insurers and employers as a counterweight to powerful hospital groups and allow insurers to publicize how much they’re paying providers; and
• Prohibit practices conducive to price fixing, such as clauses that prohibit providers from charging rival insurers less for their services.