When it comes to health care, bigger is not better

In my 25-plus years of working in health care, I have never read an article quite like Dr. Bob Kocher’s recent commentary in The Wall Street Journal titled “How I Was Wrong About Obamacare.” It is rare indeed for a policymaker to admit to employing a faulty assumption in creating the foundation of a law as significant as the Affordable Care Act. The assumption?  That “bigger is better.” I can tell you from personal experience that independent, physician-led enterprises can coordinate patient care through a network of providers, ensuring excellence and quality while aggressively managing cost as effectively, if not more so, than their much larger “integrated” counterparts.

Policymakers, legislators and regulators have for decades labored under a similar bigger is better delusion, implementing policies that favor, or regulations designed to promote, large “integrated” systems at the expense of smaller, independent enterprises. In health care, large hospitals and hospital systems have convinced lawmakers that they are the best stewards of the public’s health, arguing that only they have the required collaborative ability to bring care to populations and in the process have attempted to become all of health care to all people.

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Now, using the market leverage they have gained through favorable public policy, hospitals have undermined the ability of smaller, independent medical practices to operate in their markets. With many smaller medical practices struggling to survive, hospitals have stepped in, purchased their competitors, and in the process garnered higher reimbursements for the exact same services the newly hospital-employed physicians previously provided in their independent offices. And what has happened to health care costs in the meantime?

The regulatory side of health care is too often designed as one-size-fits-all. Conceptually, this is understandable: a set of regulations is easier to administer across several large systems than over a wider universe of smaller entities. Accompanying this administrative sledge hammer is the belief that larger systems also bring with them economies of scale; therefore, the customer will reap economic benefits.  But that is not exactly how things work in the real world, especially in health care, which brings us back to Dr. Kocher’s realization that big is not always better.

Our independent physician organization is a convener in the government’s bundled-payment program. We work with more than 50 other independent orthopedic practices across the country—and have formed the largest, integrated orthopedic bundle-payment program in the U.S.—and manage more than 45,000 Medicare joint replacements a year. The results to date: significant reductions in hospital readmissions and post-operative infections, patient satisfaction scores over 98%, while reducing costs to Medicare. Operating in groups of more than 100 surgeons, as well as in groups of one or two, these physician group practices have two common elements: they are all independent and rely on physician-led medicine to determine the optimum care plan for their patients—the kind of “personalized” care that, Dr. Kocher points out, large health systems can’t hope to deliver. 

The transition in health care reimbursements away from the volume of services to the value of services provided is creating a new care delivery system, and quickly.  What we have learned is that it is not the vastness of an organization that creates the best outcomes in health care, it is the ability of organizations, of any size, to work cooperatively in networks with physicians designing and leading the care for their patients. Policymakers need to understand this crucial idea, otherwise our best chance to save the U.S. health care system may be wasted.

Jan Vest is CEO of Signature Medical Group, a multispecialty physician group based in St. Louis, Mo.


The views expressed by authors are their own and not the views of The Hill.