United healthcare purchasing practices

[q-school]

https://www.usatoday.com/story/money/2017/12/06/unitedhealth-group-davita-medical-group-acquisition/926187001/


Can we discuss (rationally) implications for practice if insurance companies continue to acquire physician practices?

This seems like it should be illegal to me, but obviously it is not. I’m frequently begging insurances following denials so I wouldn’t know what to do if they were my boss.

Of course my hospital owns a large insurance plan so it certainly could be argued whatever conflicts exist for insurance companies to own might also exist for hospital ownership.

[Hatton]

In a few years perhaps there will be several healthcare corporations employing the vast majority of docs.  No single payor but several large combo organizations squeezing physician salaries since there will be no where else to work.

[ENT Doc]

Integration is occurring with hospital systems developing their own insurance and insurance buying hospitals. I know which system I'd rather work in, but it's an efficient model if you're not publicly traded.

[Dreamgiver]

ENT Doc can you elaborate?

[ENT Doc]

Dreamgiver wrote:

ENT Doc can you elaborate?

Click to expand...

I assume the elaboration requested is not regarding examples of business dealings but in regards to the efficiency comment.  Medicine's biggest flaw is that it's not a normal market.  There is little transparency of pricing and quality, or in a word - value. You also have a misalignment of incentives.  Insurers don't want to pay out, because they are incentivized to generate profits for their shareholders.  Hospitals want to get paid more of the premiums for various reasons, including making improvements for patients.  The patient gets stuck in the middle of this wrestling match having to pay more, because demand for healthcare is relatively inelastic, and because the simple solution is to simply charge more next year.  This process incentivizes more spending, not value creation.  If hospital systems could successfully have their own insurance product the incentives immediately change.  Now, they collect premiums but want to cut costs because every dollar saved is more profit, which gets put back into the system.  And they don't want to simply withhold services because they are in competition with the ACO down the street.  Now, imagine if the government, instead of figuring out how to pay for things, simply set rules - you must be transparent with your results, controlling for X, Y, and Z, and be transparent with your pricing.  Then you have the workings of a normal market competing on value.  The reason it doesn't work when you have shareholders is that this incentivizes value extraction.  Profit is not put back into the underlying business for the patient's interest but extracted for the benefit of others.  Unless patients are the only shareholders this doesn't work - like if as a patient of a given ACO buying its health insurance you owned residual equity, or residual premiums.  Some insurers do the premium sharing now, but they fail to create value more broadly.

[CordMcNally]

On the surface, the jaded skeptic in me suspects that United will reimburse their own doctors (i.e. themselves in the end) moreso than other physicians that aren't under their employment even though the same care was given.

[ENT Doc]

CordMcNally wrote:

On the surface, the jaded skeptic in me suspects that United will reimburse their own doctors (i.e. themselves in the end) moreso than other physicians that aren’t under their employment even though the same care was given.

Click to expand...

United will simply salary everyone, employ more second level providers, and they will institute whatever policies they can aimed at cost reduction.  The other advantage this gives them is they can now see exactly what the other payers are paying, since not just United patients will use their clinics.  This opens up a host of interesting possibilities.  But none of them necessarily good for the doctor or patient.