In a recent Washington Post article, David Ignatius asked Delos “Toby” Cosgrove of the Cleveland Clinic about the changes occurring in the health care marketplace. Although we disagree with Ignatius that Obamacare would be a catalyst for positive change in the market, we do agree that free market reality is forcing changes in health care delivery. A few quotes from Ignatius’ article summarize the major changes happening in the health care market today.
Cleveland Clinic-Sydell and Arnold Miller Family Pavilion
●Hospitals are consolidating. Today, says Cosgrove, 60 percent of hospitals are part of consolidated systems; an example is Cleveland Clinic, which has locations in four states, including its headquarters in Ohio. These systems will keep merging as they drive toward greater efficiency. It’s the same process that happens in every industry, from banking to book retailing. It will make care a little more impersonal — but also cheaper and better.
This rationalization will close small and inefficient community hospitals — one U.S. official estimates that up to 1,000 hospitals should be closed. As a result, we’ll have fewer hospital beds and more outpatient and home care. What’s forcing consolidation is that reimbursements from Medicare are going to be reduced, requiring hospitals to cut costs.
●Doctors are becoming salaried, joining the trend pushed by the Cleveland and Mayo clinics and some other top providers. Today, about 60 percent of doctors nationwide are on salary, up about 10 percent from several years ago. Cosgrove predicts that this will rise to at least 70 percent over the next decade.
Salaried doctors won’t have the same economic incentives to provide expensive treatments that may not make sense for patients. They’ll be paid well (an internist at Cleveland Clinic starts at about $120,000), but they won’t receive the stratospheric salaries that once encouraged many a doc to dream of driving a Porsche.
Meanwhile, a shortage of doctors and nurses means that less senior (and less expensive) practitioners are providing more care. A physician’s assistant, increasingly, will treat minor ailments; in operating rooms, says Cosgrove, 40 percent of those present are technicians rather than doctors and nurses.
●Health records are finally going electronic, which should allow additional big savings. It’s an expensive transition (Cleveland Clinic has spent $300 million on electronic records systems over the past decade), but it will pay huge dividends in cheaper and better care.
