I think that monopolies in the health care industry are bad for patients. They are bad when they involve health insurance companies. They are bad when they involve physicians. And they are bad when they involve hospitals. They are bad on a national level. They are bad on a regional level. And they are bad on a local level.
Now I am not referring to monopolies in a legal sense as those are already outlawed. I am referring to monopolies in a practical sense; those that drastically limit patients' choices.
When there are fewer choices, prices go up and service goes down. Competition is necessary and good for customers. It is well documented that when banks consolidate, their fees to customers increase. I will let you be the judge of what sort of service you feel the Bureau of Motor Vehicles provides as an example of a business with a monopoly.
In health care, when a market is controlled by few insurance companies, these same trends occur when it comes to prices and services. Not only does this limit options for the patient, it limits doctors' ability to get a fair shake from the insurance company. If one company insures most of the patients in a geographic area, a physician risks losing all those patients unless he capitulates to the demands of the insurer.
Because it is illegal for independent doctors to collectively bargain as a group with the insurance companies, these insurers have enormous leverage in contracting with physicians. This is one of the main reasons doctors are forming larger and larger groups. The balance of power can be restored if most doctors in one area are part of a single group. The insurance company needs to provide its subscribers with area physicians as much as the area physicians need to be able to accept the patients' insurance. It is easy for an insurer to leave a single physician out of its network. It is much more problematic to do so to a large group of doctors.
The doctors benefit financially from these larger groups as they can negotiate a higher reimbursement from the insurance companies. The patient is left with fewer choices and higher prices. This is clearly happening on a regional level as evidenced by specialists such as cardiologists and orthopedists continue to consolidate into larger and fewer groups.
Unfortunately, this is also happening on a local level. Twelve years ago, the New Castle Clinic was the largest group in town with four internists and two general surgeons. The next largest group was New Castle Family Physicians with five doctors. All the other doctors in town were either solo practitioners or in with a single partner.
Ten years ago Henry County Memorial Hospital bought out New Castle Family Physicians and made those doctors employees. All except for one independent, intrepid individual who went on to successfully start his own practice on Spiceland Pike.
Since then, like a cancer that is inevitably spreading, the hospital has taken over almost all other doctors' practices in New Castle. First were the family practitioners, then the OB/Gyns, the orthopedists, the pediatricians, and finally the internists and general surgeons. Currently there are only three full time doctors with offices in town that are not hospital employees.
As inpatient revenues declined, the hospital looked for other areas to increase cash flow. Henry County Memorial Hospital delved first into the visiting nurse market, then the hospice market, the pharmacy market, the assisted living facility market, and finally the urgent care market.
While ensuring a captive market, a free market has largely disappeared. This translates into less freedom for the patient. Although the same doctors are still available and most patients may not be able to discern any difference from when the doctors were self-employed to now that they are hospital employees, differences do exist. Some are subtle, some are not.
There exists certainly the appearance of a conflict of interest when your hospital employed physician directs you to a physical therapist, a pharmacist, a visiting nurse, or a hospice. Is the referral based solely on the needs of the patient? Or is it influenced overtly or subtly by what's in the best financial interest of the doctor's employer.
Now most of the doctors that are employed by the hospital are honorable people, but to believe that a referral is not influenced by that relationship is naive. Only by the doctor not having any vested interest in any of these health care entities can the patient be assured that said referral is based solely on what is in their best interest.
There is also a distinct lack of competitive pricing when the majority of physician offices are run by the hospital. As I discussed elsewhere, this matters little to the patient with insurance but to the cash paying patient there is less ability to negotiate a fair price for a service. To a large entity like a hospital there is a lack of incentive to provide accommodations as an individual patient is less valuable.
Just as the doctor is an employee, so too are the staff at the offices. There is less accountability to the physician from the staff as opposed to the situation in a doctor owned office. In any business there exists the inevitable bureaucracy and lack of efficiency as the highest levels of management becomes further and further removed from the finished product. The patient bears the brunt of this in trying to get health care and billing questions answered as well as trying to deal directly with people who are empowered to make the decisions necessary to address unique situations and problems. Customer service becomes such a monumental problem that outside consultants are paid to teach basic skills to employees and to provide self-congratulatory press releases based on bogus surveys.
Locally, the analogy with Wal-Mart comes to mind. While Wal-Mart does not buy out competitors, it does eliminate them and reduces local shopping options to customers; options not just for department store items but also for groceries and pharmaceuticals. But at least with Wal-Mart you get low prices.
