A few weeks ago, Dr. Jordan Asher posted his perspective on how physician practice consolidation is driving changes in how providers at all levels deliver care. Last week, we hosted Dr. Asher in the Health:Further office to talk about that and more.
A recent study found that over 5,000 physician practices were acquired by larger healthcare organizations between July 2015 and July 2016. Why is so much consolidation taking place these days?
As we talk about ‘consolidation’ or ‘expansion,’ ‘vertical’ or ‘horizontal integration’ – there are lots of words we use for that now. It’s not a new concept. I remember back in the mid-nineties […] we watched a wave of this happen at that time. [E]verything in healthcare is sort of sinusoidal, it goes up and down over time. So this is not a new situation.
At the end of the day, there are lots of reasons why people come together to form larger communities. Both on the positive side and sometimes because it’s just like, ‘Uncle. I give up.’ And whenever times of change are in the wind, regardless of the industry, that drives what we are calling consolidation or the coming together of like-minded [groups].
Why is consolidation attractive to physicians?
There’s a couple of big dials that are being turned at the same time. Number one is the sheer desire, as a physician, to take care of people. When I went into practice, I went into practice to diagnose and treat and take care of people. I did not go in to create my own business. That would’ve been a whole different track. And in fact, if you look at the education around what you need to diagnose and treat, the whole business component is completely foreign. Our brains just don’t work that way. They can, but that’s not what we decided to do with our lives. So there’s a strong desire to say, ‘what’s the best way that I can truly do what I want to do, which is take care of people, and not worry about those other things?’
The other [reason] is a lifestyle balance. And they sort of go hand in hand [..]. I truly believe that lifestyle balance and the health of those that we’re asking to serve others is incredibly important. And I think we need to design models that do that.
Why is consolidation attractive to hospitals and health systems?
Historically, [hospitals and physicians] were meant to be kept apart. [I]f you look at all the regulations, if you look at all the rules, hospitals and physicians really cannot work closely together.
Now, we’re being asked to drive value. Value-based care. […] And in order to truly deliver value, which is really quality plus service divided by cost, different parts of the ecosystem have to work together. Otherwise, we’re just completely segmented – and we all know about our healthcare being segmented today. So in order to work together, we have to be together and come together. And in the present regulatory environment, employment [of physicians by hospitals] is the easiest way to do that.
What are some of the downsides of consolidation?
The flip side to that is a little bit of a loss of autonomy. So if I’m becoming an employee, OK, how do I – and how do we as an organization – keep some of that autonomy within that construct?
The other [downside] is distribution of services. As [consolidation occurs], do you decrease a distribution of services? Basically meaning providing care to people in rural areas. So you could say in a big way it might improve it because we’re big enough to put people out there. But if the consolidated services focus more in an urban area where there’s more business, you can see people being pulled away from our rural situation.
[However,] the first question you ask is what level of care is really needed in those areas? Just because the hospital might not be there, in fact, it might allow for better care to be delivered in different ways. So it’s that polarity of how we need to ask the question, think about the question and manage those opposite sides.
What’s the reality of value-based care today?
We are really trying to make a seismic shift in how we view care and how we pay for care. Those are very different. We have been historically a country where we very much focus on how to take care of acute issues. We have not been focused as a society on how do we better our overall society and their health for the future? So there’s a big shift, whether you want to call it preventive care or public health or however you want to frame it. And then from a payment standpoint, we are really beginning to make a shift from paying for a service, an episode of service, to paying for the value that service brings.
Whenever you have those big changes, it takes time. And we’re living in that right now. We have to remember we’re on a journey and that journey means that we’re going to have starts and stops. We’re going to make wrong turns. But if we keep the end goal in mind, then we have to back up and keep working towards it, and I truly believe the end goal in mind is ‘how do I deliver value around your health to you within the context of you being a human being?’
What do healthcare organizations and individual physician practices need to be thinking about?
As physicians, we need two things: We need to be open and reframe a little bit of what our job is. Our job is to serve and help others. And how do I define success? Historically, physicians define success as […] trying to keep you alive. What am I going to fail at a hundred percent of the time? Ultimately, keeping you alive. Because we have a finite life. So we’ve gotten into a model where success is defined by a situation that is unobtainable.
So now we have to say, ‘OK, what is real success?’ Success is me working with you as a partner to improve health in an experiential and transformational way. And if we can get into that mind frame, then all of a sudden innovations can occur around that. I can take it more of a consumer-based approach, but I can still diagnose and treat. I will go home feeling much better what I’ve done at the end of the day because not only if I diagnose and treat, but I’ve done it within the context of your life and I will feel more fulfilled. And I think we need to give that back to the physicians.
for hospitals and healthcare systems, I think it’s a very different discussion because how we’re getting paid is completely changing. And so for healthcare systems, how do they shift from thinking about being a hospital system or a healthcare system, to a health system, which is markedly different because then instead of me focusing on ‘how do I take care of you when you get sick,’ I’m focused on ‘how do I help you, help yourself not get sick. And that is completely different.
For more on this topic, see our conversation with Rasu Shrestha of UPMC.