Steward Shops for Docs

Today's Managing Health Care Costs Indicator is $3 million

It's no surprise and no secret that hospitals are buying up and affiliating with physician practices.

This could lead to some social benefits.  Hospitals have the capital and expertise to make the big IT investments necessary to bring physician practices into the 21st century.   Organizations that bring together hospitals and their associated physicians can better accept bundled payment, and even capitation.  More integration could certainly lead to better coordination of care.  Some even suggest it could lead to cost savings. 

Today's Boston Globe highlights a northeastern Massachusetts group of 150 physicians, who represent most of the medical staff of Anna Jacques Hospital of Newburyport.  The physician group just announced it would sever its ties to Beth Israel and affiliate with Steward, the for-profit hospital system which has promised to be the low cost high value delivery system in the state.   Steward is also seeking to purchase delivery systems in Rhode Island and other states.

Both sides have lawyered up, and The Incidental Economist suggests that Steward is likely to prevail, and I agree. 

What will this do to the cost of health care?

Steward said that the physicians could earn $3 million more through their contract compared to their potential earnings through the Beth Israel contract.   Steward is also said to have promised to cover any losses under a large global budget (capitation) contract with Blue Cross of Massachusetts. 

If any delivery system is promising higher physician income, and no “downside” risk without new processes to decrease resource use in the system, this will lead to either dashed physician hopes or increased health care costs.