'Medical arms race' thriving among hospitals

OB/GYN News,  Feb 15, 2002  by Joyce Frieden

• E-mail
• Print
• Link

WASHINGTON -- The "medical arms race" appears to be alive and well in America's hospitals, several experts said at a conference on health care market trends sponsored by the Center for Studying Health System Change.

Despite more hospital mergers and increasing concern about rising health costs, hospitals are continuing to open new outpatient clinics and to buy expensive medical technology, even when it may not be necessary "I just heard the other day of a 150-bed hospital that wanted to acquire a PET scanner, and you have to ask why," said Ellen Zane, network president of the Partners HealthCare System, Boston.

This strategy represents a remarkable shift from a few years ago, according to Health System Change health researcher Kelly Devers, Ph.D. Dr. Devers and her colleagues have tracked hospitals in 12 markets nationwide for the past 5 years.

"In 1996-1997, hospitals focused on success strategies involving selective contracting, and they devoted significant resources to the acquisition of physician practices and other provider organizations," she said.

But by 2000, that had all changed. "Now the hospitals are deemphasizing mergers and physician practice acquisitions, and ... are reviving their 'retail strategies' to compete for doctors and patients," Dr. Devers said. Some providers are even building new hospitals to attract more specialists.

The researchers found that 44% of 43 hospitals surveyed had expanded their inpatient or outpatient specialty care centers within the past 2 years. This competition may lead to poor quality of care, since specialty centers with lower numbers of patients tend to have worse outcomes, she said. The intense competition is surprising, since consolidations have meant fewer competitors in the marketplace. "It should mean that there are fewer 'Joneses' to keep up with."

One outcome of this trend is increased costs of care, Ms. Zane noted. "Radiology costs are the new pharmacy," she said, referring to pharmacy's previous position as one of the largest "cost centers" for hospitals. "MRIs and CTs have proliferated, and utilization is skyrocketing. It tremendously ramps up the cost of care."

COPYRIGHT 2002 International Medical News Group
COPYRIGHT 2008 Gale, Cengage Learning