Corporate health care is here

Hospital mergers have been accelerating in the last few years, and doctors and other health care workers have been swept up in the process.

The last time merger mania took place in the 1990s, seemingly to provide efficiencies and savings, costs went up. At that time some doctors became interested in joining their local hospitals and became salaried employees. This time around multiple incentives are playing out, and the exodus from private practice has accelerated. Between 2007 and 2012 the number of cardiologists employed by hospitals has increased from 11% to 35% (N. Engl. J. Med. 2014;370;198-9).

The increased need for investment in financial infrastructure has led many private practitioners to seek the umbrella of the local hospital. Cardiology has seen a shift in federal reimbursement rates for imaging favoring hospital-based testing. At the same time, local hospitals have sought out mergers and acquisitions of varying sorts in order to become more competitive in the marketplace and to acquire more development capital. The number of hospital mergers increased almost twofold from 2009 to 2012 (N.Y. Times, Aug. 12, 2013, p. B1). Local hospitals have been anxious to solidify relationships within their local communities by creating referral networks. Others have looked nationally for the "quality branding" for their institution.

Merger mania has also moved from local to national control by both profit and nonprofit corporations. Entrepreneurism has driven financial incentives in order to develop large networks that have the potential to improve quality and efficiency. An unwritten motivation is the potential to generate large profits that have the potential of increasing health care costs in the pre-Medicare population that we saw in the last merger go-around. Several large medical groups, like the Mayo Clinic or the Cleveland Clinic, have expanded their network and instituted franchiselike arrangements with hospitals thousands of miles distant from their headquarters, to create referral networks for highly specialized and high-cost procedures.

Much of this is hardly news to any of us. This trend is a result of multiple forces that include the changes in imaging fees, which provided the potential for expanding sources of revenue to hospitals and hospital networks. Many physicians found that merging their practice with their local hospital, where they had been practicing, was not too wrenching. That is, until they woke up the next morning to learn that their local hospital had just merged with another system. They now found that they had to deal with unfamiliar administrators with different views on health care. The system was no longer sensitive to local health care but to the corporate bottom line. Suddenly, the familiarity with the local hospital administrator, whom they knew, had been replaced by a "corporate vice president for physician relations."

Recent press coverage has recounted tales of corporate initiatives that have driven up expenses in order to improve the bottom line. One recent report recounts the story of emergency department physicians who were financially rewarded or penalized based upon the statistics of their hospital admission rate (N.Y. Times, Jan. 23, 2014, p. A1).

According to the attorney who represented the doctors, "It’s not a doctor in there watching those statistics – it’s the finance people." The economics of cardiology provide many targets for finance people to improve the bottom line. Some examples are biannual or annual stress tests, multiple imaging procedures, and "tack-on" procedures during angiography, to name just a few. The most recent story (Bloomberg News, March 6, 2014) of how one of America’s most prestigious hospitals manipulated admissions for coronary angiography and trolled local communities with stress tests to increase the number of angiograms, raised shudders in this reader. In 2010, seven of the hospital-based cardiologists each averaged 301 referrals to the cath lab, which was "15 times the average by all 546 doctors who sent patients to the lab that year."

These events were not driven by "finance people" alone, but had complicity by doctors. They suggest that the process is endemic in cardiology today. It has been said before; the enemy is US.

Dr. Goldstein, medical editor of Cardiology News, is professor of medicine at Wayne State University and division head emeritus of cardiovascular medicine at Henry Ford Hospital, both in Detroit. He is on data safety monitoring committees for the National Institutes of Health and several pharmaceutical companies.

Hospital mergers have been accelerating in the last few years, and doctors and other health care workers have been swept up in the process.

The last time merger mania took place in the 1990s, seemingly to provide efficiencies and savings, costs went up. At that time some doctors became interested in joining their local hospitals and became salaried employees. This time around multiple incentives are playing out, and the exodus from private practice has accelerated. Between 2007 and 2012 the number of cardiologists employed by hospitals has increased from 11% to 35% (N. Engl. J. Med. 2014;370;198-9).

The increased need for investment in financial infrastructure has led many private practitioners to seek the umbrella of the local hospital. Cardiology has seen a shift in federal reimbursement rates for imaging favoring hospital-based testing. At the same time, local hospitals have sought out mergers and acquisitions of varying sorts in order to become more competitive in the marketplace and to acquire more development capital. The number of hospital mergers increased almost twofold from 2009 to 2012 (N.Y. Times, Aug. 12, 2013, p. B1). Local hospitals have been anxious to solidify relationships within their local communities by creating referral networks. Others have looked nationally for the "quality branding" for their institution.

Merger mania has also moved from local to national control by both profit and nonprofit corporations. Entrepreneurism has driven financial incentives in order to develop large networks that have the potential to improve quality and efficiency. An unwritten motivation is the potential to generate large profits that have the potential of increasing health care costs in the pre-Medicare population that we saw in the last merger go-around. Several large medical groups, like the Mayo Clinic or the Cleveland Clinic, have expanded their network and instituted franchiselike arrangements with hospitals thousands of miles distant from their headquarters, to create referral networks for highly specialized and high-cost procedures.

Much of this is hardly news to any of us. This trend is a result of multiple forces that include the changes in imaging fees, which provided the potential for expanding sources of revenue to hospitals and hospital networks. Many physicians found that merging their practice with their local hospital, where they had been practicing, was not too wrenching. That is, until they woke up the next morning to learn that their local hospital had just merged with another system. They now found that they had to deal with unfamiliar administrators with different views on health care. The system was no longer sensitive to local health care but to the corporate bottom line. Suddenly, the familiarity with the local hospital administrator, whom they knew, had been replaced by a "corporate vice president for physician relations."

Recent press coverage has recounted tales of corporate initiatives that have driven up expenses in order to improve the bottom line. One recent report recounts the story of emergency department physicians who were financially rewarded or penalized based upon the statistics of their hospital admission rate (N.Y. Times, Jan. 23, 2014, p. A1).

According to the attorney who represented the doctors, "It’s not a doctor in there watching those statistics – it’s the finance people." The economics of cardiology provide many targets for finance people to improve the bottom line. Some examples are biannual or annual stress tests, multiple imaging procedures, and "tack-on" procedures during angiography, to name just a few. The most recent story (Bloomberg News, March 6, 2014) of how one of America’s most prestigious hospitals manipulated admissions for coronary angiography and trolled local communities with stress tests to increase the number of angiograms, raised shudders in this reader. In 2010, seven of the hospital-based cardiologists each averaged 301 referrals to the cath lab, which was "15 times the average by all 546 doctors who sent patients to the lab that year."

These events were not driven by "finance people" alone, but had complicity by doctors. They suggest that the process is endemic in cardiology today. It has been said before; the enemy is US.

Dr. Goldstein, medical editor of Cardiology News, is professor of medicine at Wayne State University and division head emeritus of cardiovascular medicine at Henry Ford Hospital, both in Detroit. He is on data safety monitoring committees for the National Institutes of Health and several pharmaceutical companies.

Hospital mergers have been accelerating in the last few years, and doctors and other health care workers have been swept up in the process.

The last time merger mania took place in the 1990s, seemingly to provide efficiencies and savings, costs went up. At that time some doctors became interested in joining their local hospitals and became salaried employees. This time around multiple incentives are playing out, and the exodus from private practice has accelerated. Between 2007 and 2012 the number of cardiologists employed by hospitals has increased from 11% to 35% (N. Engl. J. Med. 2014;370;198-9).

The increased need for investment in financial infrastructure has led many private practitioners to seek the umbrella of the local hospital. Cardiology has seen a shift in federal reimbursement rates for imaging favoring hospital-based testing. At the same time, local hospitals have sought out mergers and acquisitions of varying sorts in order to become more competitive in the marketplace and to acquire more development capital. The number of hospital mergers increased almost twofold from 2009 to 2012 (N.Y. Times, Aug. 12, 2013, p. B1). Local hospitals have been anxious to solidify relationships within their local communities by creating referral networks. Others have looked nationally for the "quality branding" for their institution.

Merger mania has also moved from local to national control by both profit and nonprofit corporations. Entrepreneurism has driven financial incentives in order to develop large networks that have the potential to improve quality and efficiency. An unwritten motivation is the potential to generate large profits that have the potential of increasing health care costs in the pre-Medicare population that we saw in the last merger go-around. Several large medical groups, like the Mayo Clinic or the Cleveland Clinic, have expanded their network and instituted franchiselike arrangements with hospitals thousands of miles distant from their headquarters, to create referral networks for highly specialized and high-cost procedures.

Much of this is hardly news to any of us. This trend is a result of multiple forces that include the changes in imaging fees, which provided the potential for expanding sources of revenue to hospitals and hospital networks. Many physicians found that merging their practice with their local hospital, where they had been practicing, was not too wrenching. That is, until they woke up the next morning to learn that their local hospital had just merged with another system. They now found that they had to deal with unfamiliar administrators with different views on health care. The system was no longer sensitive to local health care but to the corporate bottom line. Suddenly, the familiarity with the local hospital administrator, whom they knew, had been replaced by a "corporate vice president for physician relations."

Recent press coverage has recounted tales of corporate initiatives that have driven up expenses in order to improve the bottom line. One recent report recounts the story of emergency department physicians who were financially rewarded or penalized based upon the statistics of their hospital admission rate (N.Y. Times, Jan. 23, 2014, p. A1).

According to the attorney who represented the doctors, "It’s not a doctor in there watching those statistics – it’s the finance people." The economics of cardiology provide many targets for finance people to improve the bottom line. Some examples are biannual or annual stress tests, multiple imaging procedures, and "tack-on" procedures during angiography, to name just a few. The most recent story (Bloomberg News, March 6, 2014) of how one of America’s most prestigious hospitals manipulated admissions for coronary angiography and trolled local communities with stress tests to increase the number of angiograms, raised shudders in this reader. In 2010, seven of the hospital-based cardiologists each averaged 301 referrals to the cath lab, which was "15 times the average by all 546 doctors who sent patients to the lab that year."

These events were not driven by "finance people" alone, but had complicity by doctors. They suggest that the process is endemic in cardiology today. It has been said before; the enemy is US.

Dr. Goldstein, medical editor of Cardiology News, is professor of medicine at Wayne State University and division head emeritus of cardiovascular medicine at Henry Ford Hospital, both in Detroit. He is on data safety monitoring committees for the National Institutes of Health and several pharmaceutical companies.