At first, I thought it was a joke.
The healthcare world was supposedly abuzz last week when the New England Journal of Medicine published (on Jan 2, 2020) the report of a study that shows that consolidation in the hospital industry doesn’t lead to higher patient satisfaction or to higher quality.
Gee, who woulda thunk it?
After all, we know that if we want a high quality meal, we don’t go to a 10 table Michelin starred restaurant, we go to a very large and efficient joint, like McDonald’s. Oh, we don’t do that?
Despite what hospitals argue when they’re looking for regulatory and political support, they don’t merge to create quality: They merge to reduce competition and to raise prices.
But mostly they merge because the hospital industry is in chaos.
The number of hospital closures and bankruptcies continues to climb. The percentage of cases flowing out of hospitals to physician-owned, freestanding facilities continues to grow.
As a result, hospitals cling together for survival like B-list actors in a low budget horror movie.
Here are the real lessons for you:
1. Don’t go into the hospital business.
2. Be very wary of allowing a hospital into any physician venture.
3. Don’t hire a hospital administrator to run your physician-owned ASC or other facility (which is another way of looking at point #2).
4. Focus on why the hospital business is in disarray: It no longer has a compelling business model.
And, then, with your free time, consider becoming my collaborator on a research grant request. We’ll study why anyone would perform a study to see if hospital mergers lead to higher quality. Apparently, there’s a lot of money available for this kind of stuff and there’s no reason why we shouldn’t try to get our fair share.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss