The Daily Yonder's coverage of rural economic issues, including workforce development and the future of work in rural America, is supported in part by Microsoft.
“Teva Pharmaceutical Industries Buying Allergan’s Generics Business for $40.5 Billion.”
“Aetna Agrees to Acquire Humana for $37 Billion.”
“HCA: 40,000 Licensed Beds, 200,000 Employees.”
“Walgreens Boots Alliance to Buy Rite Aid.”
Drug makers, hospital groups, and insurers have announced mergers and acquisitions worth about $270 billion in the first nine months of 2015.
Many people worry that these huge deals will not help consumers.
The argument of the merger advocates is that they are driven by the need for quality and cost-effective care, as if that can only be provided by increasingly huge “multi-national” companies. Personally, I believe the mergers are less about increased economies of scale or necessary for clinical integration and much more about raw market power — an arms race between buyers and sellers.
Across rural America there remains a very strong preference to keep health care and health care jobs local. That is not to speak against rural collaboration or affiliations; in fact, that is necessary now more than ever to improve quality, support local care and sustain local jobs. This principle is at the heart of Rural Wisconsin Health Cooperative, which was formed by five rural hospital CEOs in 1979 and has now grown to 40 rural local health systems.
Rural America is increasingly forming health networks in local communities and across regions. Sixty-six healthcare organizations in parts of Iowa, Missouri, and Nebraska have created a strategic alliance called the Regional Provider Network (RPN). PRN’s president and CEO Michael Hein, M.D., says in a recent issue of HealthLeaders magazine that community has everything to do with health.
“[RPN is] riven by the recognition that health and health outcomes are a local construct, that our health is determined by the communities where we live. And the people who are best positioned to create value for our patients, improve the quality of care and lower the cost are those closest to those in the communities. … It is anchored in this deep belief that, ultimately, healthcare is local, and an organization that is anchored on that principle should be able to create value in a superior way.”
Regardless of who owns whom, collaboration among rural providers and within their communities adds real value as we make the transition from a predominantly fee-for-service world (volume) to one focusing on value (such as providers being rewarded for better care.) Increasingly around the country we are seeing a diverse array of innovations; just a few examples that RWHC is doing or discussing:
- Participation in Accountable Care Organizations (ACOs) or ACO-like networks promoting local access and demonstrating rural value.
- Championing best practices to improve outcomes, increase patient satisfaction, and reduce costs.
- Self-funded health insurance for network members, as a group or in regional clusters.
- Education on risk contracting, management, and risk sharing.
- Collaborative population health data analysis.
- Engagement in “consumer convenience” medicine.
So what is big enough? I like the viewpoint of the Advisory Board Company, a healthcare consulting firm: “Whether we talk about dollars, beds, square miles, or patients, there are no magic numbers. The right size for your organization is the size–and shape–that allows you to pursue your strategic aims as competitively and efficiently as possible.”
In addition, my personal view regarding what is best for rural communities is summarized in the phrase we have used at RWHC for some time: “Keep Local Care Local” and by a tagline at the Monroe Clinic in Monroe, Wisconsin: “Bigger Isn’t Better, Better is Better.”
Tim Size is executive director of the Rural Wisconsin Health Cooperative based in Sauk City.