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writing for godot

Corporate Mergers of Health Care Giants: CEOs and Wall Street Win, Patients Lose

Written by jgeyman   
Monday, 08 January 2018 06:09

The days of having your own doctor and a stable way to access care are rapidly disappearing as the drive to increase corporate mergers of health care giants gains further momentum. Under the guise of bringing patients more convenience in accessing care, we are seeing instead increasing fragmentation of health care as merging giants get even bigger and more profitable.

Here are some recent examples of this fast-moving trend:

UnitedHealth Group
As the largest health insurer in the U. S. by market share and the largest health care company in the world by revenue, UnitedHealth Group has been moving aggressively into the direct delivery of health care by buying up doctors’ groups and clinics across the country. UnitedHealth already had a roster of some 30,000 physicians across more than 230 urgent care centers and 200 surgery centers as well as its pharmacy benefit manager serving 65 million people. Within its broader goal of building a larger ambulatory care business, it recently bought the DaVita Medical Group for about $4.9 billion. That purchase added about 280 clinics offering primary and specialist care, together with 35 urgent care centers and 6 outpatient surgery centers. Its longer-term goal is to provide primary care and ambulatory services in 75 markets, representing about two-thirds of the U. S. population. (Mathews, AW. UnitedHealth to Buy Large Doctor Group for $4.9 Billion. Wall Street Journal, December 7, 2017: B3).

CVS-Aetna merger
CVS Health, the second-largest U. S. drugstore chain with some 9,700 drugstores, recently bought Aetna, the nation’s third largest health insurer, in a $69 billion deal. This merger will combine Aetna’s insurance products with CVS drugstores, walk-in clinics, and drug-distribution operation. Consumers are being told that this will make health care more convenient and accessible at CVS locations, and that costs can be cut with improved quality of care. (Tracer, Z. Forget Amazon. Health companies really want to be UnitedHealth. Bloomberg News, December 4, 2017).

Dignity Health/Catholic Health Initiatives
As patients increasingly go to walk-in clinics or urgent care centers, or use an app on their cellphones to check out a skin rash or monitor their diabetes, they are bypassing more expensive sites of care such as physicians’ offices and hospital emergency rooms. In another response to this general trend, Dignity Health and Catholic Health Initiatives have recently announced their plan to become a national chain of Catholic hospitals and clinics that span 28 states. This merger is expected to include 139 hospitals, more than 700 sites of care, employing more than 25,000 physicians and other clinicians. (Abelson, R. Hospital giants vie for patients in effort to fend off new rivals. New York Times, December 18, 2017).

These mega-deals are likely accelerating as the specter of Amazon looms over the health care industry. Although that Internet behemoth hasn’t yet made moves into health care, many observers speculate that it may enter some part of the prescription drug business, such as distribution or retail, and use technology to deliver virtual medical care through cell phones and computers. This prospect may well have played a role in the CVS-Aetna merger.

These mergers will have a number of adverse impacts for patients. They will find that their choice of providers, clinics, pharmacies, and hospitals will be sharply limited within merged systems. Limited health services, mainly first contact care, will be provided, but way short of primary care, with little or no continuity of care. Patients will see nurses instead of physicians in many of these walk-in clinics, without primary care responsibility that by definition includes comprehensive care, coordination and monitoring of all of the patient’s clinical conditions, with continuity of care over years. Instead, what is already a frayed primary care system will become even more fragmented and inadequate. We cannot expect that increased convenience of “care” will result in improved quality or outcomes of care.

While the CEOs of corporate giants pocket big profits with these mergers, shareholders whistle to the bank. As one example, CEO Mark Bertolini of Aetna is expected to receive a payout of about $500 million, including increased valuation of his stock shares, when operational control of the combined company is transferred to the new CEO. (Mattioli, D, Mathews, AW, Becker, N. Aetna CEO in line for $500 million payout. Wall Street Journal, December 6, 2017: B1).).

We know from long experience that larger market share in our mostly for-profit system does not contain costs for patients. It just gives larger hospital or other systems more latitude to charge what the traffic will bear. Despite the Affordable Care Act, enacted in 2010, health care costs keep going up at uncontrolled rates for Americans in our system with no significant price controls. Individuals and families face increasing costs of insurance, higher deductibles, copayments, coinsurance, and out-of-pocket expenses. The average family of four now pays about $26,000 a year for insurance and care. A new poll has found that 48 percent of Americans name health care as their top problem for the government to focus on, up by 17 percent in the last two years and higher than any other expense. (The Associated Press-NORC Center for Public Affairs Research. New year, same priorities: The public’s agenda for 2018.) Steven Brill, attorney, journalist, and author, has this to say about the failure of our system to control health care costs:

It’s about money: Healthcare is America’s largest industry by far, employing a sixth of the country’s workforce. And it is the average American family’s largest single expense, whether paid out of their pockets or through taxes and insurance premiums. (Brill, S. America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Health Care System. New York. Random House. 2015, pp. 7-8.)

Bottom line on this merger frenzy—it’s all about giving health care organizations and facilities even more ability to grow their patient base and increase their profits. We have no reason to believe that health care costs will be reined in or that quality of care will improve.

One promising development that could counter the adverse consequences of mega-mergers is a bill being brought forward by the new Congressional Antitrust Caucus. If enacted, it would force such regulators as the Federal Trade Commission and Department of Justice to examine evidence that monopolies and massive companies bring higher prices, lower wages, job losses and environmental damage, not the jobs and higher wages that they promise. (Townsend, T. Keith Ellison and the new ‘Antitrust Caucus’ want to know exactly how bad mergers have been for the American public. New York Magazine, December 4, 2017). We can hope that this effort will be productive in reining in the concentrated economic and political power of massive corporations.

John Geyman, M.D. is the author of Common Sense about Health Care Reform in America (2017), and Crisis in U.S. Health Care: Corporate Power vs. The Common Good, and The Human Face of ObamaCare: Promises vs. Reality and What Comes Next

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