Consolidation in Health Care

In the last decade, we have seen a move to consolidation of health care entities. Instead of individual doctor's offices, pharmacies, insurance companies, and hospitals, we've started to see large integrated systems of care. I am particularly aware of this as I talk to my co-residents who are looking for their first jobs after graduation. Whereas in the past, physicians would open solo practices or join small private groups, now it is becoming more and more popular to latch onto a large entity. While solo and small group practices have more potential to be lucrative, large entities offer job security, a focus on medicine over business, flexible schedules, and better benefits. But this shift from small businesses to large ones and to integrate care is more prevalent than where physicians are working. Hospitals, insurance companies, pharmacies, and other health care entities are all melding together and getting bigger. Is this better for patients? This remains to be seen. The advantage of large groups includes purchasing power, spreading risk over a larger area, negotiation of better prices, lowering overhead, and the ability to buy costly improvements like capital equipment or electronic medical records. But this does not always funnel down to patients. In the same way that large systems of care negotiate better rates from drug companies, device manufacturers, and insurers, they can make money by setting high costs for patients. With fewer systems of care in the marketplace, competition decreases. I'm not sure whether consolidation is ultimately better for patients, but it is certainly the way the health care market has gone.