Dr Paul B. Ginsburg Discusses Consolidation Methods and Alternatives

Hospital consolidation is a common practice, but its benefits can often be accomplished through other mechanisms, said Paul B. Ginsburg, PhD, the Leonard D. Schaeffer Chair in Health Policy Studies at the Brookings Institution and a professor of health policy at the University of Southern California.

Hospital consolidation is a common practice, but its benefits can often be accomplished through other mechanisms, said Paul B. Ginsburg, PhD, the Leonard D. Schaeffer Chair in Health Policy Studies at the Brookings Institution and a professor of health policy at the University of Southern California.

Transcript (slightly modified)

What is important for both payers and consumers to understand when it comes to hospital consolidation?

In a sense, they should be inclined against it and should be demanding of, well, what makes this consolidation different? I’m not saying that all consolidation is bad. Sometimes a hospital may be failing, may not be large enough to be viable, and consolidation is inevitable, either through a merger or through it disappearing from the market.

Certainly, consolidation is one of the tools where providers can better adapt to health IT requirements, reformed provider payments, but very often there are mechanisms short of a merger that can actually accomplish these things. There’s a lot, we call it virtual integration, just contractual relationships between various parties can often accomplish what is claimed as a benefit of consolidation.

How can hospital consolidation be done right?

Well, I think some of the biggest opportunities involve, for example, hospitals not employing physicians, but contracting with physician organizations to partner: partner for a new product, partner in an ACO contract with a health plan. And these potentially can work better, because physician leaders in say, medical groups or independent practice associations may be more successful in fostering changes in behavior by physicians that are needed to do well under reformed payments.