Bill Vandivier, DO, a consultant at Insight Health Partners, explains how the health care industry differs from traditional corporations with regard to consolidation.
It takes 7 times more people to make $1 billion dollars in health care than it does for a for-profit, private business, said Bill Vandivier, DO, a consultant at Insight Health Partners. Vandivier's talk, "Healthcare Consolidation: Too Big To Succeed?" was presented at at this year's National Association of Managed Care Physicians Forum (NAMCP), held in Orlando, Florida, April 21-22.
Can you give an overview of your work?
I'm a physician, board certified in family practice and medical informatics. I'm currently working with health care partners doing medical consultation, medical health care consultation. [I] previously had worked 11 years as a family practice doc, 7 years in informatics, and 3 years running a medical group 437 providers.
Why is health care unique when it comes to consolidations? Why might the same benefits seen in other industries not materialize in health care?
I think it's a great question because if you look at health care as just a financial business, you would think, "hey, it should scale just like everything else." But when you start to think about how other industries get cash, get money, it's you have a consumer that's buying something directly. Well, in health care, you have a lot of stuff going back and forth with payers, different states, different [regulations], and a lot of different payers within every state. And so when you look at the statistics of it, you have, for every billion dollars made in a company that is a for-profit, private company not doing health care, it takes about 100 employees. For health care, it takes 770 employees. So it's 7 times as many people to get that same billion dollars.
And so if you don't start paying attention to some of those pieces, as you consolidate more and more, prices just increase in every market, especially the small markets then, because you're having to keep the team locally and then having managerial teams at a bigger level and then it just keeps getting more and more people piled into the mix around every dollar that's coming through.