MDNews - Greater Kansas

+ LEGAL RX  +++ ++++++++++++++++ ++++++++++++++++ + +++ i Consolidation E By Cody G. Robertson VEN BEFORE PRESIDENT Barack Obama signed the Pat ient Protec t ion and Affordable Care Act (PPACA) into law on March 23, 2010, a trend toward consolidation had begun to emerge within the health care industry. Perhaps in part due to the economic downturn, the late aughts saw a marked increase in the number of horizontal consolidations among hospitals. At the same time, physicians began forming increasingly larger practice groups, and in some cases, eschewing the “business of medicine” entirely in favor of hospital employment. Now that health care reform is a reality (at least for the time being), further consolidation within the health care industry appears inevitable. A primary goal of PPACA is to contain the rising costs of health care. As such, providers are certain to face increasing downward pressure on gov- ernment reimbursement in the months and years to come. Consolidation is a natural reaction to such pressure, as it allows providers to take advantage of economies of scale, provides greater access to capital and bolsters their bargaining power with insurers and suppliers. Specific provisions within PPACA will also necessarily lead to further consolidation within the ranks of health care providers. For instance, as discussed in a prior “Legal Rx” column, the enactment of PPACA effectively put an end to the development of new physician-owned hospitals and also severely curtailed the expansion of physician-owned hospitals already in n the Post-Reform Era existence. As a result, commentators predict that many physicians who might have otherwise been hospital investors will opt to become hospital employees. Perhaps the greatest harbinger of consolidation, however, can be seen in the accountable care organizations (ACOs) to be created under PPACA’s Medicare Shared Savings Program. As the PPACA explains, ACOs are “groups of providers of services and suppliers,” which “work together to manage and coordinate care for Medicare fee-for- service benefi ciaries.” As envisioned, ACOs would be eligible to share in the cost savings they achieve for the Medicare program if they meet certain quality thresholds and cost reductions. Although consolidation is not a prerequisite to the formation of an ACO, large health systems comprised of multiple hospitals, physician practices, rehabilitation centers, hospice clinics and other such facilities would seem to have the early lead in forming ACOs and taking advantage of the available incentives, as the affi liations necessary for an ACO are already in place within those systems. Among smaller health systems, stand-alone hospitals and physician practice groups, the pressure to consolidate then becomes even greater. As with many provisions of PPACA, the Secretary of Health and Human Services has been tasked with implementing the Shared Savings Program. The secretary recently proposed regulations implementing that program. Until that time, it was anyone’s guess exactly what an ACO would look like, how it would operate and how its performance would be measured and incentivized. Perhaps not surprisingly, however, this has not slowed the punditry from speculating on these issues. In fact, a cottage industry of ACO consultants has already begun to develop in anticipation of growth in the ACO market. At the same time, in a development that should give all providers pause, some- thing of a dogfi ght has stirred recently between the Department of Justice and the Federal Trade Commission (FTC) regarding which of the two agencies will get to investigate and prosecute possible antitrust violations by ACOs. For its part, the FTC has indicated it intends to vigorously enforce antitrust policy against ACOs, while Justice has hinted that it may take a more lenient approach. While further consolidation within the health care industry appears inevitable, much uncertainty remains regarding how that consolidation will be received and regulated by the various agencies that claim an interest in the game. Although consolidation can, in many instances, be a win-win for patients and providers alike, physicians and hospitals considering consolidation need to do so with their eyes wide open. n ADVERTISERS’ INDEX Goodell Stratton Edmonds & Palmer, LLP .............. Back Cover Kansas Pathology Consultants P.A. .....................Inside Back Cover Keurig ....................................................13 Wichita Clinic ......Inside Front Cover Wichita Nephrology Group, P.A. ..9

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