While the lingering impact of the recession slowed demand for healthcare services nationwide, it didn't stifle the aggressive competition among hospital systems for well-insured patients.
Researchers at the Washington-based Center for Studying Health System Change visited 12 nationally representative metropolitan communities in 2010 and discovered that hospitals with significant market clout continued to command high payment rate increases from private insurers and tighter hospital-physician alignment, particularly a growth in hospital employment of physicians.
This aggressive economic activity heightened local concerns about growing provider market power, the study found.
"Despite the sluggish economy, dominant hospitals and systems generally maintained strong bottom lines, and many expanded beyond traditional geographic boundaries in their quest for well-insured patients," said HSC President Paul Ginsburg.
HSC researchers periodically visit 12 nationally representative metropolitan communities, interviewing representatives of providers, health plans, employers, policy makers and consumers. HSC has been tracking change in the CTS markets since 1996.
The 12 communities are Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.
Ginsburg said HSC found that, since 2007, the trend of hospitals employing physicians has accelerated. Physicians in most markets are more actively seeking the stability and security of employment in larger physician-owned or hospital-owned groups.
Hospitals see physician employment and tighter alignment as a way to capture more specialty referrals and hospital admissions in a fee-for-service payment system and as central to building the clinical and financial integration needed to succeed under potential new payment models, such as accountable care organizations, that involve risk-sharing and reward quality and efficiency.
HSC also discovered during the site visits that safety net hospitals saw demand jump during the recession as even more people became uninsured or covered by Medicaid.
Nonetheless, Ginsburg said safety net providers generally absorbed much of the increased demand and remained financially stable, often with the help of federal policy and stimulus funding that protected Medicaid eligibility and increased direct funding to providers.
In regard to healthcare reform, hospitals, physicians and insurers generally viewed coverage expansions favorably, but all worried about protecting revenues as reform requirements phase in.
The HSC team found providers positive about the potential to treat newly insured patients, but anxious about the prospect of inadequate reimbursements from Medicaid and health plans offered through state insurance exchanges scheduled to come on line in 2014.
They speculated that the primary care physician supply would likely be insufficient to handle additional demand from newly insured patients, especially if physicians are unwilling to treat patients because of low payment rates. Inadequate physician supply, in turn, could exacerbate existing pressures on ED capacity.
Hospitals and physician groups also were exploring how to respond to expected Medicare payment reforms, including the introduction of ACOs and other forms of risk-based payment.
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