"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Friday, April 25, 2014

Mixed Messages

On Wednesday of this week, the US Court of Appeals issued a decision backing the Federal Trade Commission and ordered an Ohio-based health system, ProMedica, to dissolve its 2010 acquisition of St. Luke's Hospital in Maumee, Ohio.  The FTC challenge was based on the acquisition reducing competition and allowing ProMedica to raise prices.  They have six months to unwind the transaction from four years ago and any purchase of St. Luke's has to be approved by the FTC.  I can't imagine unwinding an acquisition of this magnitude after four years.  

Now for the mixed message.  Under the Affordable Care Act, competition is no longer front and center as it once was in health care.  We are moving away from volume-based care delivery to value based.  Our goal is to keep patients out of the hospital where and when necessary and to care for them in the most appropriate location. It is our intention to bend the cost curve by getting unnecessary cost out of the system.  In addition, because of the new risk associated with the ACA, hospitals have been told that they can only make it if they have revenues anywhere from greater than $1 billion dollars to $5 billion dollars. (It depends on which consultant you listen to on the subject, but so far the advice is proving to be solid.)  There is also the blurring of the lines between insurers becoming providers and providers becoming insurers.  Our industry is changing dramatically; however, the FTC has stated publicly that they don't care what Health and Human Services or the Centers for Medicare and Medicaid (CMS) do under ACA, they will continue to focus on health care competition as one of their top priorities.  Maybe, the time is now for the FTC Chair and the newly appointed Secretary for HHS to have a discussion on the matter.

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