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Economists’ Conclusions at Odds with Experience in Coordinated Care


More coordination may lead to higher prices, according to Harvard’s Katherine Baicker and Michigan’s Helen Levy.

Assumptions are the weakest part of even well-reasoned arguments. Bad assumptions lead to bad predictions. Combine the two with lofty academic credentials and an agenda, and the ensuing conclusions can be disingenuous at best and damaging at their worst.

So goes the argument of Harvard University economist Katherine Baicker and University of Michigan economist Helen Levy in their New England Journal of Medicine essay. They conclude that while coordinated care may lead to better allocation of resources, it may also lead to less competition and lower quality by encouraging consolidation, providing leverage for doctors and hospitals to raise prices.

“Coordinated systems may thus deliver the right care to the right patient at the right time, but at the wrong price,” according to the authors.

The folks at combined plan/provider giants Kaiser Permanente, Geisinger, and similar care-coordination pioneers that are the models for new coordinated systems are sure to disagree, and their historical performance of providing quality care and superior outcomes at lower cost provides compelling proof.

And that is where Baiker and Levy’s arguments break down, exposing their agenda. They argue for activist antitrust enforcement by the Federal Trade Commission and the Department of Justice Antitrust Division and against sharing savings with providers who lower costs while meeting quality and performance benchmarks.

Consolidated, powerful healthcare systems always have the potential to be misused, particularly if incentives for achieving the triple aim of higher quality, better service, and lowered costs were to be stripped away, but even then existing laws provide ample protection.

That is where faulty assumptions fail the authors and their agenda of increased regulation and activist enforcement are exposed. No assumptions are required to predict the outcome should the FTC and DOJ Antitrust Division be gullible enough to buy into their arguments. The preservation of a fragmented, uncoordinated care system stripped of any incentive to perform other than the heavy heels of complex, overbearing, and counterproductive regulation that got us into this mess is the obvious outcome.

The last thing that we need is the present system on regulatory steroids. Consolidation and care coordination are two very different things, and the authors do an already dysfunctional healthcare system no favors.

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