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Does competition mean lower health costs? Another take: Guest view

By ,
Jaan Sidorov, president and CEO of the Care Centered Collaborative of the Pennsylvania Medical Society
Jaan Sidorov, president and CEO of the Care Centered Collaborative of the Pennsylvania Medical Society - (Photo / )

According to an Aug. 24 editorial in the CPBJ, the growing multi-hospital-insurer alliances could lead to greater competition and innovation. That, in turn, is supposed to lead to lower prices.

Not necessarily.

As the Central Pennsylvania market becomes dominated by regional hospital systems, it’s just as possible that health care prices will go up. Experience in other markets has shown that size enables hospitals to use their market clout to negotiate higher – not lower – prices. And having insurers and hospitals create partnerships can limit patient choice and further increase costs. What’s more, size can drive some doctors out of business, which will exacerbate the physician shortage.

As for innovation, size may not matter: small hospitals also have a track record of success. One reason may be that health care innovation may be more a function of culture, not scale.

That’s why the Pennsylvania Medical Society started a business subsidiary called the Care Centered Collaborative. Since it’s possible that these large systems could lead to higher costs, the Collaborative is working with independent doctors in Central Pennsylvania to offer an alternative: a physician-led network that works with all insurers and all hospitals equally to find the highest-quality and lowest-cost care options.

It’s called a “clinically integrated network” or “CIN.” Physician-led CINs have been successful in other states because it’s the physicians who work with multiple insurers on a regional basis to develop high-performing quality measures and payment rewards that focus on keeping patients healthy.

Physician-led CINs also have the advantage of working largely with private practice physicians. Recent research has shown that smaller independent practices have a higher level of career satisfaction and are less likely to have unnecessary hospitalizations. Health insurers should welcome the prospect of working with motivated healthcare providers who want to provide the best possible care for their patients.

This means more, not less, competition for the Central Pennsylvania market. As hospitals and their insurer partners compete, they will also be competing with a network of independent physicians who are offering an alternative approach that is outside the large institutions, maintains patient choice and delivers value in the community setting.

As the CPBJ noted, “we are about to find out if a competitive market featuring large, strong institutions can deliver on the promise of lower costs.” That’s true. The large, strong institutions will not be competing with just each other, but with physician groups that are offering an important alternative.

Dr. Jaan Sidorov is president and CEO of the Care Centered Collaborative of the Pennsylvania Medical Society.

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Write to the Editorial Department at editorial@cpbj.com

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