Monday, February 11, 2013

Fwd: qotd: Strength through integration?

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-------- Original Message --------
Subject: qotd: Strength through integration?
Date: Mon, 11 Feb 2013 08:43:48 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

American Medical News
February 11, 2013
Moody's: Doctor integration vital to stronger hospital finances
By Sue Ter Maat

For the sixth year in a row, Moody's Investors Service is issuing a
"negative outlook" to nonprofit hospital finances. Yet the bond-rating
agency notes that the facilities have collectively improved their bottom
lines in recent years.

In part, Moody's said, the unexpected gains have come because of
physicians. Closer relationships with physician practices, including
outright acquisitions, have helped hospitals stabilize their market
shares and find ways to cut costs, Moody's said. "The theme is for
tighter and closer alignment and integration [of doctors] with
hospitals," said Lisa Martin, senior vice president of Moody's
Healthcare Team.

Nonprofit hospitals' three-year compound annual growth rate of revenue
fell from 7.3% in 2008 to 5.4% in 2011, Moody's said. The measure looks
at changes over the previous three years and assigns an average annual
value to them.

But hospitals have taken positive steps that have prevented an even
greater negative impact, Martin said. Among them are mergers and
acquisitions of other hospitals, long-term care facilities and physician
practices. These forces have meant that doctors are being drawn more
closely into hospital operations and decision-making through joint
ventures and hospital board memberships, especially as more doctors are
employed instead of working in their own practices, she said.

Mergers and acquisitions are expected to continue through 2013 and 2014,
as hospitals prepare for full implementation of the ACA. Moody's
analysts consider this activity positive, because it has led to
consolidation of services and reduced expenses.

But Moody's warned that mergers and acquisitions could be difficult in
the short term because of turnaround challenges at takeover targets,
merging cultures and difficulty closing services after mergers.

Comment: Consolidation. Mergers. Acquisitions. Between hospitals.
Between physicians. Between hospitals and physicians. Between physicians
and insurers. Within a framework of integrated affordable care

Our political leaders' decision to choose a market model of health care
reform led by private insurers is resulting in the shutting down of
whatever minimal semblance there was of a free market between competing
health plans, as we convert to health care delivery oligopolies and

Does anyone really believe that the private insurers are going to be
able to drive costs lower and quality higher by their market skills in
leveraging the forces of competition between health care delivery
systems? The insurers already understand that this model is fading
rapidly. That is why they are involved in designing managed care
products that shift the insurance risk to others while greatly expanding
their market in administrative services. Plus they are gaining control
of sectors of the actual health care delivery system.

Our policy experts say, "Yes, but by establishing accountable care
organizations, this is the way that we can start to pay for quality
instead of volume." Accountable to whom? Not the patients nor the taxpayers.

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