Big Business Medicine

According to Elsa Pearson writing for STAT, “Hospital mergers and acquisition are a bad deal for patients. Why aren’t they being stopped?” Thirty years ago I wrote Modern Medicine: What You’re Dying to Know with Diane Haugen. We had five chapters to define the five major problems responsible for rising health care costs and decreasing quality of care. One of the chapters was titled “Big Business Medicine.” We could see even back then the evils of mergers and acquisitions in health care. Who gains, who loses, and who pays. 

         The companies who purchase, merge, or acquire another health care organization make a big profit. Who pays for these mergers? Patients in the form of higher insurance premiums.

         Most of the administrative personnel who run these huge, multiple site corporations are thousands of miles away from the clinics and hospitals they control. They have no interest in keeping health care costs down as long as the insurance patients have pays their claims. Nor do they really care if their decisions decrease the quality of care for patients.

         Ten years ago a hospital near where I practice was purchased by a large corporation. Soon 19 of 20 emergency room physicians quit because their salaries were reduced by 15 to 20 percent. This hospital had a famous interventional cardiology unit with seven physicians. Now there was one interventional cardiologist and the waiting rooms and parking lots were empty. The pediatrics unit has been eliminated. Oncology has been eliminated. All of this was being done to divert money from running a good hospital to pad the coffers of the parent organization. This same corporation purchased a rural hospital for $1, but refused to get a mammogram machine, something the community wanted. They told the group wanting the mammogram machine to have ice cream socials to earn enough money to pay for the mammogram machine, but at the same time resurfaced a parking lot that didn’t need it. It doesn’t take very many of these kinds of decisions to ruin a good rural hospital and leave the community depending upon the hospital services with little more than a band-aid station.

         CVS’s purchase of Aetna for 75 billion dollars is another example of how mergers will simply increase the cost of your health care. Where does the 75 billion dollars come from? You and me and pharmaceutical profits. CVS bought Aetna because it was interested in a pharmacy benefits manager (PBM) which Aetna owned. So this is like buying your own police force—exactly what the PBM program was designed to prevent.

         How did this merger get passed by the Department of Justice (DOJ) which is supposed to oversee monopolies? I’m not sure what went on behind closed doors, but I bet it smells like last weeks fish. On the surface, the DOJ apparently approved the
75 billion dollar acquisition because the deal was “innovative.” Aetna shareholders will receive $297 per share. The profit in this year is $750 million, paid for by consumers, other insurances, Medicare, and Medicaid.

         According to the CVS CEO, they are planning centers for vision, audiology, nutrition, a care manager, and clinics. Now doctors can’t own pharmacies or hospitals, but hospitals and pharmacies can own doctors. Now the DOJ stops small mergers but lets the big ones occur. This merger will pull huge amounts of money from consumers and accelerate huge profits for CVS.

         In the past, states have had the power to stop or prevent monopolies, but today, although the laws haven’t changes, state policies remain largely impotent and unenforced even though the laws haven’t changed when it comes to monopolies. I can only guess why, but I’ll bet it has something to do with money.

         Years ago Zig Zigler said, “if you always do what you’ve always done, you’ll always get what you always got.”

         In plain, simple terms, CHANGE in our legislation and our legislatures is very much needed. And above all, we need to start enforcing the legislation which already exists.

         Who knows why agencies charged with the work of preventing unhealthy and abusive mergers don’t do their jobs. That 75 billion dollars is a lot of money. Who would notice what special interest got a nice payment to grease the rails.

         It’s time to stop mergers and acquisitions which are not compatible with the public’s best interest. More mergers are only good for the companies buying the smaller hospitals. These mergers are no good for the public and they need to stop. Our legislators should know and care and do their jobs.