Death of Hospitals ( the exodus of surgical volumes)
Are you ready to be unreasonable this year? Or would you rather continue to bet on the healthcare status quo, that is, on a hospital-centric system? Or, is being “unreasonable” actually more reasonable?
George Bernard Shaw stated that “the reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” Clearly in the “unreasonable” corner. Franz Kafka stated “in man’s struggle against the world, bet on the world.” Clearly in the “stick with the big boys” camp. Or, is it?
For the past twenty years, the reasonable approach has been for physicians to become more tightly aligned with hospitals. That’s where the money was and that’s where the power was. So much so, that physicians were barred from expanded and new Medicare certified hospital ownership.
But then fast forward to today. The hospital-centric financial and power structures are weakening.
Yes, it’s true that not all hospitals are dead, but most are slowly dying. Over time, what we know as hospitals today will be few and far between. That’s the theme of Mark’s book,The Impending Death of Hospitals (get a complimentary copy digitally, or a hard copy, on Amazon), and it’s being played out in the popular press on a very regular basis.
Witness the recently announced merger of CVS and Anthem in a bid to grab power away from hospitals. Or, the recently announced merger talks between Ascension Health and Providence St. Joseph Health that would create the largest U.S. hospital chain — each fears it cannot continue to exist alone.
What many, if not most, think is the reasonable, the safe, the traditional, approach is to continue to bet on the large players. That’s the bet being taken by the huge percentage of physicians employed by hospitals. But hospitals have bloated infrastructures and are sitting ducks for government intervention, whether by way of tax policy or via the tangled web of the government-hospital complex in which one “partner” is more equal than the other.
What to do? Deer in headlights? Reasoned thought? Unreasonable thought?
What clues, what proof, what evidence can we use to find our way?
In addition to closed hospitals, shrunken hospitals, down-sized new facilities, and bedless hospitals, there are other trail markers to the future. Payors are pushing radiology procedures out of hospitals to freestanding imaging facilities. Payors are pushing surgical procedures to ASCs. Hospital employment is becoming dangerous because if (when?) the system fails there will be no supported practice left to salvage. Hospital contracts in a world in which hospitals have declining case volume becomes problematic at best, disastrous at most.
Yet another famous writer, F. Scott Fitzgerald, stated that “the test of a first rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”
We’re smart, so let’s listen to Scott: Keep one foot in the hospital-centric world while taking affirmative steps toward one in which hospitals will be minor players. But it’s not enough just to hold ideas. Ideas must be implemented for them to be of much value.
For the past several years, I’ve been betting big on independent physician ventures. From surgery centers, to imaging facilities, to significant sized practice ventures. Yet, at the same time, I’ve been working with both large and small(ish) hospital based groups, and on physician-hospital joint ventures. That work will continue.
At the same time, in 2018, we’ll intensify a major push into expanded, physician-led ventures, with an emphasis on re-creating, on the physician-controlled level, integrated systems. As hospitals downsize and shift to the outpatient world to become more like ASCs, physician-owned ventures can become more like what hospital systems used to be, without the overhead, without the administrative bloat, and without the baggage.
Blog from Mark Weiss www.advisorylawgroup.com
CVS Aquires Aetna, to create CVS Healthcare.
Recently, the Wall Street Journal, in a front page article, addressed the pending acquisition of Aetna by CVS Healthcare.
The piece focused on the panic that the deal is causing many healthcare players. They’re concerned over the combination of a giant retail delivery platform, the CVS stores, with the health insurance, managed care, and huge patient database of Aetna. They see it as a threat to more traditional health insurance companies as well as to pharmacies and to medical groups.
There’s another lesson here, something I’ve touched on before on the blog in connection with a post regarding pharmacies beginning to encroach on physician practice (read The Pharmacy Will See Your Patients Now).
The lesson is this: Healthcare was once very “silo-ized.” There were, for example, pharmacies that were only pharmacies, insurance companies that only sold insurance, hospitals that provided only the facility not professional services, and so on. But today, those walls are breaking down with incredible speed.
The opportunity for physicians and players smaller than the CVSs of the world is to understand that the membranes between healthcare “silos,” which were once completely impermeable, are not only now becoming semi-permeable, they’re becoming almost completely permeable.
Courtesy of Mark Weiss Blog www.advisorylawgroup.com
