More Competition as the “Cure” to Health System Cost/Quality Problems: How Do Large System Players Respond (without sounding ridiculous)?
How does a large academic medical center address the issue of market competition without coming across as blatantly self-serving or desperately clinging to the status quo?
How does a large academic medical center navigate questions about whether more competition in its market would improve quality and reduce costs? In particular, how does the system effectively raise concerns about facilities that enter a market to serve mostly commercial patients, leaving Medicaid and uninsured patients to seek care in emergency departments? Regulators are tired of hearing the arguments about how healthcare is “different” from other sectors in terms of the economics of competitive markets, and many states have repealed antiquated “certificate of need” legislation and other state-level market controls on new entrants. Is it possible for a large academic medical center to address the competition issue in a balanced manner that is not vehemently defending the status quo or otherwise coming across as blatantly self-serving? What is the proper role of regulators in ensuring that new facilities and providers agree to serve Medicaid and other low income patients?
This is an interesting and challenging problem that many academic medical centers are facing and failing at. The ability to address the problem is highly constrained as the levers of control are limited. As a single institution it is unlikely that one would have the ability to meaningfully address the regulatory framework. Given that the regulatory framework is not going to change, there are only two remaining strategies that I see that remain to preserve one’s margins: 1. Fully embrace the role as a safety net hospital and innovate in this space to make this group profitable (bundled payments, upside risk models, etc.) or 2. compete on quality and directly link this back to the payers. Both strategies have challenges.
One argument that is well validated is the relationship between volume and quality outcomes. This is seen in many surgical specialties especially pediatric cardiac surgery. Thus there is an argument to be made that when some tertiary and quaternary services are diluted in a region, the region receives mediocre care at best.
As an academic medical center I would recommend leading the conversation in the community around value-based payment and new reimbursement methodologies such as bundled payments. Your value proposition is to improve the health of your community and contain costs. Academic medical centers have traditionally been leaders in creating innovating treatments and interventions. I would recommend expanding the academic focus to include creation of innovative ways to better deliver healthcare in a more community-centric model.
This is definitely a challenging problem in the rapidly evolving landscape of healthcare. Large academic medical centers have historically prided themselves on the traditional tripartite mission–often focusing more heavily on research or education than clinical care. The clinical care was always there because there were the publicly funded patient’s and the commercially funded patients who had extreme problems. In the past, as physician salaries in academic were lower, reimbursement was better and research dollars more concentrated this model seemed to work. Now with demand for higher salaries, lower reimbursement, tighter competition for research dollars, and new competition there is a need for change. I have seen some AMCs hold steadfast, declare their unique contributions and subsequently lose their local marketshare to more innovative providers. I think the keys for AMCs are to 1) have a leader who recognizes the need to change/evolve, 2) be willing to try soemthing different and innovate even if it might fail, and 3) accept that without good clinical care there will be no research or education because there will be no patients.