Lutes, Snyder Comment on How Health Reform Impacts Physicians and Hospitals

Mark Lutes, a Member of the Firm in the Health Care and Life Sciences practice, and Lynn Shapiro Snyder, a Senior Member of the Firm in the Health Care and Life Sciences and Litigation practices in the Washington, D.C., office, were featured in an article about how physicians and small hospitals are racing to merge into larger, more efficient organizations.

The article, "After health care reform, physicians and small hospitals race to merge into larger, more efficient organizations," by Ben Fischer, discussed how health care providers have followed a path of steady consolidation for two decades, with hospitals turning into "health care systems" and physician group practices growing far beyond their humble beginnings. Until now, doctors and hospitals wanting to hunker down as independent often could. But many practicing physicians and experts predict that option will become untenable by the time the laws is fully implemented in 2018.

"One of the law's strongest drivers of consolidation is its attempt to change the financial incentives for providers," said Lutes.

"Hospitals have another reason to expand their footprint into extensive, integrated systems with outpatient rehabilitation centers, clinics and preventative care initiatives: The law includes incentives for hospitals to shift business away from traditional acute care inpatient facilities into more cost-effective settings," said Snyder.

"In most communities, especially in the suburban and rural areas, the hospital is the No. 1 employer, and that has to change. If we're going to be able to afford health care for both our entitlement population and our private payers, we have to minimize the use of our hotel piece, or the institutional piece, of health care," stated Snyder.

Lutes stated, "It is an opportunity that is realized on the ground in hundreds, millions of individual clinical decisions, trying to match up patients with the right amount of care at the right time in the right place."

"This time, though, it might be different because of Medicare's involvement. The combination of a new payment model from Medicare — the single largest source of revenue of many health care providers — and economic pressures could make the new model stick," Lutes said.