Here’s What I Just Told Senators About Health Care Consolidation

June 8, 2023

Guest post by Shawn Martin
Executive vice president and CEO

This morning I testified before the Senate Finance Committee. The hearing was called “Consolidation and Corporate Ownership in Health Care: Trends and Impacts on Access, Quality, and Costs.” In a detailed statement the Academy sent the committee earlier this week, as well as in my live remarks, I had plenty to say about all of the capitalized words in that hearing title. In particular, I came ready to talk about the payment aspect of consolidations, including the vital need to improve fee-for-service physician payment and transition to value-based care.  

That latter topic is an especially timely one today because the Center for Medicare and Medicaid Innovation this morning announced a new, state-based, multipayer model for value-based payment that strongly reflects the Academy’s steady advocacy. Making Care Primary, which will begin testing next year in as many as eight states, incorporates several of our longstanding recommendations; its introduction is an important advocacy win for us. We are reviewing the model’s technical specifics and will share details with you when that analysis is complete.

How We Got Here

Behind the acquisition of family medicine practices are several forces: inadequate physician payment; systemic underinvestment in primary care; overwhelming and costly administrative complexity; enrollment growth in public programs, including those administered by corporate entities; misaligned incentives that reward consolidation; and a legislative and regulatory compliance framework that overburdens family medicine practices without addressing rising hospital prices and spending.

Any one of these would be far from ideal. Together, they’ve driven most independent practices toward consolidation — not to embrace opportunity but rather to avoid economic ruin. 

Not all consolidation is bad. There are companies employing primary care physicians and focused on bolstering primary care capacity, access and investment in order to improve health outcomes for all populations and address equity within underserved communities. Some organizations do invest revenue into primary care, provide primary care teams with clinical autonomy and work to meet local needs. In fact physician-led accountable care organizations often achieve greater savings than their hospital-led counterparts.

In the main, however, a mounting body of evidence links vertical integration to higher prices and costs, including insurance premiums, without improving care quality or patient outcomes. For many hospitals and payers, the motivation behind integrating primary care practices into larger, consolidated models is control of cash flow. Because primary care, as the front door to the health care system, can significantly influence utilization, referrals and chronic illness management, non-independent primary care practices are being leveraged by their owners to maximize revenue in other business areas.

The result is an extremely unlevel playing field, one that fails to put patients first and compromises clinical autonomy for family physicians.

Among the harmful impacts: revenue siphoned away from primary care, often where it is most needed, and a depletion of independent practices able to make autonomous, patient-centered clinical decisions. Hospitals and corporate entities, including payers and private equity, now own more than half of physician practices and employ nearly three-quarters of physicians. Seventy-three percent of all AAFP members and 91% of new family physicians are employed — a sharp and concerning increase from just 59% of members in 2011. 

What to Do

Congress has a responsibility to act in favor of a competitive health care marketplace that benefits patients and serves community health. To start, that means

• modernizing Medicare and Medicaid fee-for-service payment rates, taking inflation into account;
• advancing site-neutral payment policies (that is, ensuring that payment is the same across settings for services that can be safely provided in a physician’s office);
• implementing billing and price-transparency legislation; and
• bolstering support for primary care practices to enter into alternative payment models, meeting practices where they are and allowing them to gain a foothold in value-based payment.
   

To accomplish this last aim, we again urged lawmakers to provide CMMI with additional authority and funding specifically directed to supporting independent primary care practices entering into value-based payment arrangements. CMMI should also have more flexibility in how it evaluates the success of primary care models. Demonstrating savings in primary care is a long-term undertaking; it requires the building of relationships and the marshaling of data, among other incremental steps. Policy should reflect the realities of this process.

Beyond our testimony to the Senate Finance Committee, the Academy continues to ask Congress to implement additional reforms to better deal with consolidation, including

• improving federal regulators’ antitrust enforcement authorities and resources and
• restricting the use of unreasonable noncompete agreements in physician employment contracts.
   

I believe today’s hearing indicates not just welcome attention from a key Senate committee but also broader congressional momentum in the right direction now that the debt-ceiling crisis has been resolved. For one thing, it follows the House Energy & Commerce Committee’s recent advancement of legislation we’re monitoring, including policies on how health-related ownership information is reported and boosting health-transparency provisions.

As I told the committee today, family physicians — in fact, all physicians — are at their best when they work in service to their patients and communities, not the interests of institutions or corporations. The foundation of our health care system is the human interactions inside exam rooms, not the business decisions made in board rooms. I was proud to stand up for these truths today.