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Washington Highlights

AAMC Submits Statement on Mergers and Consolidation in Health Care

May 25, 2012—The House Committee on the Judiciary Subcommittee on Intellectual Property, Competition, and the Internet May 18 held a hearing titled, "Health Care Consolidation and Competition after PPACA," which examined whether the regulations and mandates from the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) are driving smaller insurance and health care organizations out of business.

The AAMC submitted a statement  for the record explaining with the growing need for hospitals to provide more efficient, cost-effective, coordinated, and quality care, parts of the health system are experiencing some necessary consolidation. The statement explains, “This represents the reality that it is very difficult, if not impossible, to deliver the best, most efficient care when delivery is fractured. Consolidation can take many forms, including hospital mergers, acquisition of physician practices, and affiliations that allow entities to remain separate but agree on a commitment to work together in a coordinated fashion.  Such changes are evidence of a health care market that is finding positive ways to respond to numerous, often conflicting pressures.”

Judiciary Committee Chair Lamar Smith (R-Texas) said in his opening statement that “[t]he first victim of [the ACA’s] regulations will be the small, independent and innovative insurance companies and health care providers….The second victim of [the ACA] will be competition as these small businesses either go out of business, consolidate into larger businesses, or are never started at all.” Ranking Member John Conyers (D-Mich.) disagreed that the ACA is to blame, and said that it’s “a little early” to say consolidation is a result of the ACA, and that it has been happening long before ACA enactment.

The AAMC statement contends that “[t]he movement in the health care market is undergirded by an underlying assumption that the current system is unsustainable, and that teaching hospitals and health systems, and others that are the first to respond also will be the ones to guide the system to a better way of care.”

Thomas L. Greaney, Center for Health Law Studies, Saint Louis University School of Law testified that “the ACA seeks to create incentives for providers to develop innovative organizational structures that can respond to payment mechanisms that rely on competition to drive cost containment and quality improvement. The watchword here is integration. Congress recognized that it was essential to stimulate formation of organizations that could receive and distribute reimbursement and be responsible for the quality of care under the new payment arrangements contained in the ACA and developing in the private sector such as bundled payments and global reimbursements.”

The AAMC points out the new payment and delivery reforms taking place at its member institutions, saying, “Many AAMC members have embraced new and challenging opportunities that allow them to be among the early adopters of this change.  They are participants in the Centers for Medicare and Medicaid Innovations Pioneer Accountable Care Organization (ACO) project, in the CMS Medicare Shared Saving Program ACOs, and also are working with private payers to develop and test innovative care delivery models.”

Contact:

Len Marquez
Director, Government Relations
Telephone: 202-862-6281
Email: lmarquez@aamc.org

Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499
Email: ibaer@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org