Market Dominance of Hospitals….the COVID-19 Effect

Dear CSS Colleagues:

Enclosed is an interesting article sent to me by one of my HBS Classmates. I share this with you because I think it is relevant to a central question, namely what is your worth as a treating physician.

Even before the Pandemic, Hospital Mergers and Acquisitions were a reality in a healthcare market that was already transforming itself in the ACS (Obamacare) era. Now with the Pandemic, this move to consolidate care has even more wind in it’s sales. So why should you care? First, this article discusses Horizonal and Vertical acquisition of smaller hospitals and physician practices. Second, it is clear that following acquisition and consolidation of a given market, prices go up for patients not down. Third, physicians have less leverage and autonomy in how they practice as they become part of a larger network. Just think about the airline industry. When less options are available to fly to a destination, the price goes up not down. Finally, this reality will be transformational as the environment of physician-driven care and decision-making will transition to Administration-driven care and decision-making.

This affects much more than Orthopedics. I hope this is useful for each of you in order to understand the realistic decisions you may need to make in the future.

Kind Regards,

JP Warner, MD

Founder, CSS

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