Michael Davis, MD, surgical director and chief of urology at the University of New Mexico Health Sciences Center in Albuquerque, joined Becker's to evaluate the benefits — and downsides — of the growing trend of consolidation in healthcare.
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Question: What is the "dark side" of consolidation?
Dr. Michael Davis: The dark sides of healthcare consolidation are varied. The reason healthcare systems are using consolidation is to capture economies of scale and to be able to stay profitable in an industry that is seeing various challenges including decreasing value of investment, increasing costs of capital, increasing labor costs, inflation and supply issues that adversely affect costs. By having economies of scale, this helps offset costs. Data can be shared and this can help with negotiation with payers and value-based care.
The issues with consolidation are that it decreases competition in healthcare markets, potentially causing loss of revenue for smaller community hospitals. This decreases access to care in these areas. Decreased competition allows large healthcare organizations to increase reimbursement rates from payers. This can increase healthcare costs for patients and payers. Staffing challenges in large organizations can lead to strategies to cut costs which can adversely affect care. This can cause issues with patient satisfaction and experience.
Finally, integrating multiple healthcare providers and organizations into one brand can be challenging due to lack of coordination and systems that are easily blended. This can lead to delays in care and frustration felt by providers. The downstream effect is loss of skilled labor that is expensive to replace and loss of patient confidence due to decrease in quality of care.