Monopolized Healthcare: A Problem or a Solution

By Alexander IglesiasPublished November 2, 2015

In today's healthcare system, we are confronted with a pressing issue: Healthcare systems are incentivized to expand, which will lead to litigation. In the piece, I examine the issue, highlight Partners Healthcare and propose a solution where the healthcare industry would model the structure of a regulated monopoly .

In today's healthcare system, we need to evaluate the policies and regulations in place in order to develop the optimal conditions for affordable, high quality and low cost care nationwide. The first of these conditions regards monopolized healthcare. Particularly the expansion and development of Accountable Care Organizations in large cities, promoted by the Affordable Care Act. These organizations may control too large of a share of their market and spark the attention of the Justice Department and the Federal Trade Commission. At some point, a conversation will need to be held about the possibilities of regulated monopolies in the healthcare delivery sector to improve care and reduce both administrative costs and overall healthcare expenditure.

It'd be a fair assumption to assume non-profits act in good faith and solely operate to improve health outcomes for their communities however, this is not entirely the case. In Massachusetts, Partners Healthcare was established in 1993 when Brigham & Women's Hospital and Massachusetts General Hospital merged to create a much larger, more powerful entity named Partners Healthcare. This system controls a large share of the Boston healthcare market with 10 hospitals and over 6,000 physicians under it's domain. This healthcare provider has been able to leverage its power and control in Boston to force health insurance providers to reimburse care at higher rates. This becomes an issue because the increase costs for the insurer are normally reflected on the people of Boston through their insurance premiums and this increases the burden healthcare has on individual consumers and the entire market. In the last year, Partners actually tried to grow again and acquire three more local hospitals in the Boston area. A judge blocked the proposal because the healthcare provider already has too much equity in the region. Had Partners decided to move forward with the proposal, they would have faced litigation.

Imagine a healthcare system where hospital prices, hospital reimbursement rates and health insurance premiums were pre-determined by a state commission of hospital systems, clinicians, policy makers and health insurers. The state could serve as a mediator for negotiations and enforce legislation by which terms must be negotiated to the accord of the entire commission or the state would either continue the previous year's rates or decide on new rates for the new year. This structure would encourage regulated monopolies for healthcare providers and would encourage the development of ACO's that address population health issues, which will be the modern evolution of medicine from treating sick people to maintaining healthy lives. The primary issue with such a structure would be in for-profit healthcare systems which set profits as their priority. These entities could be bought out by larger non-profit healthcare providers; potentially with the support of state subsidies or other support from the state. A commission composed of healthcare providers in the state could also take a more active role in integrating statewide electronic health systems and implementing public health policies nationally.