By KEN TERRY
(This is the sixth in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)
As hospital systems become larger and employ more physicians, healthcare prices will continue to rise and independent doctors will find it harder to remain independent. Hospitals will never fully embrace value-based care as long as it threatens their primary business model, which is to fill beds and generate outpatient revenues. To create a viable, sustainable healthcare system, the market power of hospitals must be eliminated.
Federal antitrust policy is not adequate to handle this task. Even if the Federal Trade Commission had more latitude to deal with mergers among not-for-profit entities, the industry is already so consolidated that the FTC would have to break up health systems involving thousands of hospitals. Such a gargantuan effort would be practically and legally unfeasible.
The government could curtail health systems’ market power without breaking them up. For example, either states or the federal government could adopt “all-payer” models similar to those in Maryland and West Virginia. Under the Maryland model introduced 40 years ago, every insurer, including Medicare, Medicaid, and private health plans, pays uniform hospital rates negotiated between the state and the hospitals.
It would be difficult for other states to replicate this approach because commercial rates are now so much higher than Medicare and Medicaid rates, said Paul Ginsburg, chair of the medicine and public policy department of the University of Southern California and a fellow of the Brookings Institution, in 2016 testimony to the California Senate Committee on Health. A more feasible approach, he said, would be to emulate West Virginia, which sets only commercial insurance payments to hospitals. In either case, however, an all-payer system would eliminate the ability