Obamacare favors Big Hospital, less competition

For all its attacks on wealth and Big Business, the reality of the Obama Administrations is it has been a boon to the politically-connected rich. Big Government loves Big Business. Thus millions have gone to Big Green firms like LG Chem and A123 Systems, millions to GE to build alternative energy, millions to millionaires like Leo DiCaprio and Sen. Carl Levin to buy luxury electric cars.

The latest beneficiary of Obama’s Big Government is Big Hospital, one of the most powerful lobbies (along with Big Pharma and Big Insurance) behind Obamacare.

Big Hospital lobbied hard for Obamacare’s insurance mandate and for steering more business to big institutions. That’s the reality behind the megamerger of Detroit Beaumont and Henry Ford hospital systems, a marriage that will mean less competition and less innovation in Detroit’s health care sector.

“You’ve got to get bigger to manage” coming changes to health care under Obamacare, CEO of Henry Ford Health Systems Nancy Schlichting told The Detroit News’ Dan Howes. “We’ve got to get bigger through scale to make the equation work.” Added Howes: “The nation’s shifting health care landscape is forcing hospital companies and their leadership to conduct strategic reappraisals of their business models.”

This is by design.

For years, health care innovation had been occurring away from hospitals in more nimble, less bureaucratic outpatient clinics. “Today, most patients needing long-term dialysis no longer get it in hospitals but go to less costly, more convenient outpatient clinics,” reports Scott Gottlieb, a physician and scholar at the American Enterprise Institute. “Complex issues like cancer are handled in specialized centers with expertise to better manage these problems, at lower cost.”

But thanks to Obamacare’s paperwork nightmare – and Big Hospital lobbying dollars – the playing field has been tilted towards Big Business. “ObamaCare actively promotes medical corporatism,” writes The Wall Street Journal editorial page. “The reason isn’t to encourage business efficiency but for political control. Liberals believe in health-care consolidation because fewer giant corporations are easier for (Obamacare’s Independent Payment Advisory Board) to control, and more amenable to its orders.”

“Instead of betting on entrepreneurs, Obamacare assumes that improvements in the delivery of medical care will arise as a result of shifts in market power. This turns on a shortsighted view that once providers are grouped into larger networks, they’ll make wider use of things like information technology to better coordinate the care of patients, in turn lowering costs. The legislation bets heavily on hospitals, envisioning them as the hub around which providers will be consolidated,” writes Dr. Gottlieb.

Sound familiar? This is exactly the logic of the Beaumont-Henry Ford megamerger. And already, smaller practices in Metro Detroit area are feeling the pinch. Physical therapy clinics, for example, are losing business as Obamacare’s central planners reward in-house hospital referrals over out-patient referrals.

According to a Accenture Health survey, by 2013, less than a third of physicians will still be in private practice. Most will be salaried employees of Big Hospital.

“The best way to drive innovation and productivity is to have entrepreneurial providers who actually understand what things cost,” writes Gottlieb. “Once they become salaried employees, their incentive to find new efficiencies floats off into the ether.”

Obamacare’s increased price controls will incentivize more hospital mergers – but as that consolidation in turn de-incentivizes more doctors from entering practice, doctor shortages will increase (as they have under Romneycare in Massachusetts) leading to longer wait times and less care. America leads the world in cancer survival, for example, thanks to its world-leading access to care. Obamacare’s centralization is a formula for Canadian-style wait lines and higher cancer mortality rates.

Big Government + Big Hospital = Smaller Patient Choice. The case for repealing Obamacare gets more urgent every day.