Healthcare experts have differing views on the benefits of consolidation to help reduce costs but agree that most healthcare organizations are moving forward with reform through innovation, and consolidation may be just a step in that direction, according to a session Thursday at the 2013 AHIP Institute on "Shared risk, shared opportunities: Cost containment strategies for an evolving marketplace."
Consolidation and integration have become the means for many healthcare organizations to begin to coordinate care for maximum reimbursement and to wring costs out of the system.
The Cleveland Clinic has focused on partnerships, such as participating in the University Hospital Consortium on Quality in Ohio, and transparency to help improve quality indicators, patient satisfaction and lower costs, said Delos "Toby" Cosgrove, MD, president and CEO of Cleveland Clinic.
"Choice of networks, narrowing of networks and the move to transparency has been of extraordinary value and put pressure on reforming the system," he said.
The key is more efficiency and multiple ways to get costs out, he said. For example, Cleveland Clinic looked at procedures, sutures, time in recovery room, and lab tests duplication avoided, which this year to date is up to 14,000 avoided duplicate lab tests. But the quest for efficiency may also lead to consolidation.
"There is tremendous duplication on modalities, such as five or six great centers in one region for a specific procedure," Cosgrove said. So, for example, the Cleveland Clinic closed one of its hospitals because it was redundant and has also consolidated some specialties, such as obstetrics to three hospitals from six. "Innovation and efficiency also went up," he noted.
Some are not convinced that consolidation is the best approach. There is evidence that consolidation can lead to large, labyrinthine organizations, said Jay Gellert, president and CEO of Health Net Inc., although some are effective, like Kaiser Permanente.
"We should be asking what outcome we're seeking, not a structure that we are seeking," he said. "The populations that we will be serving in the future, like dual eligible, are outside the experience of the present system. It's been built around revenue maximization or improving the medical line."
"I think we overspend for certain populations and underspend in others," Gellert said, adding that there are huge socio-economic variations in providing health care.
Collaborative relationships among organizations provide an opportunity to learn from each other, in both medical and socio-economic perspectives.
The challenge in healthcare costs has a lot to do with massive unit costs, with hospitals accounting for higher variation compared with physician-oriented services, he said.
Gellert predicted that the California health insurance exchange will succeed because it incorporates that knowledge. "There is competition among physicians on the lower cost side and a strong managed care infrastructure," he said. "If you do that, you will drive a lot of people into the exchange and eliminate the risk of getting only sick people."
This will significantly change health care in California. "It's not perfect. But we are opening a door to transparency and individuals in other states will ask why not me, why can't I have that," he said.