In a recent Wall Street Journal opinion piece, Kenneth L. Davis, MD, president and CEO of Mount Sinai Health System in
Healthcare's transformation from fee-for-service to a focus on population health management has led to an increase in the number of mergers and acquisitions. Dr. Davis sees the transformation as a positive one, since fee-for-service provides physicians with an incentive to continue treating illnesses rather than working to maintain their patients' good health.
With the transition in healthcare, hospitals are focused on improving quality of care while keeping costs down. Under this model of care, hospitals are paid for the care provided to a given population, and if costs for the care increase beyond what the hospital has been paid, the additional costs are the responsibility of the hospital.
To mitigate the risks of population health management, hospitals need to broaden the populations they serve and provide services in larger geographical areas, according to Dr. Davis, which may cause concern for stand-alone facilities that have neither the volume of patients nor the geographic coverage to deliver care to a large population.
Population health management requires providing coordinated care, which makes offering a range of services from primary care physicians and specialists imperative for hospitals. To provide the necessary services, hospitals and health systems must expand through acquisitions of other care facilities — including physician medical practices, outpatient clinics, and other hospitals, according to Dr. Davis.
Hospital mergers can also help improve patient care by giving physicians access to a larger population, which enables them to obtain more information about the best treatments, according to Dr. Davis. For example, data can be collected on the larger patient population that can be used for predictive modeling of diseases.
Dr. Davis embraces the idea of consolidation in the healthcare industry, and believes mergers will lead to hospitals "delivering high-quality, better-coordinated care, improving efficiency and rooting out unnecessary costs."
More articles on consolidation in the healthcare industry:
7 recent hospital transactions and partnerships
A big shift in Chicago's hospital market: Breaking down the Advocate-NorthShore merger
Bill introduced to standardize hospital merger reviews