Back in the '80s and '90s, health plans used to advertise proudly the size of their network. Bigger was definitely better.
Flash forward to today: We're looking at "narrow networks" that limit the number of hospitals in them to the bare minimum. These narrow networks are mostly a product of the ACA, which has pushed health plans into making conservative choices about network membership. But the deeper issue goes well beyond whether a network is narrow or not.
We're spending far too little time talking about the obvious — that we need to close some hospitals if we want to squeeze costs out of the system. We simply don't need 5,000-odd acute-care hospitals operating in the U.S., at least as they're currently configured.
There are several reasons why stakeholders haven't taken the idea of getting rid of some hospitals seriously:
- Inertia: CMS may have the power to shut down hospitals or at least pressure them to merge with others to take excess capacity out of the market, but I see no signs that CMS intends to move in this direction.
- Corporate gamesmanship: Right now, we're at a stage where hospital system and chain mergers are a standard part of doing business, but that's as far as things are likely to go. The people involved aren't likely to start closing down hospitals as part of their consolidation; the idea that the supply creates demand is deeply entrenched in the DNA of many healthcare executives.
- Community resistance: Unless the facility is an absolute deathtrap, communities are generally resistant when someone tries to close their community hospital. And I think it's fair to say that most hospital executives would rather keep a functioning hospital open than engage in a fight to the death with the community.
- Uncertainty: No one's sure what effect the ACA will have on our overall healthcare system over the next couple of years. In theory, all indicators suggest that hospitals will get more traffic as people become newly insured. But given the reform's focus on primary care as a means of avoiding hospitalization, who knows how inpatient admissions numbers will look?
Eventually, our health system will have to accept the reality that having a hospital in every corner raises prices, and focuses leadership on competitive issues rather than care quality and patient satisfaction. Don't get me wrong -- I don't see this happening overnight -- but hospital closures must happen if we hope to get costs and quality in line.