Of course, leaders of local health care organizations expressed concerns. One, described as the executive director of a local health care not-for-profit, asked "do these people [the physician owners] have the staying power, the resources and the knowledge to run these hospitals?"
Actually, it looks like the physicians had a lot more knowledge than the former adminstrators.
The most interesting part of the story is how the new physician owner-operators were able to immediately spot ways to save money and/or improve quality. Some examples:
- The hospital had been paying top dollar for two different "ulcer medications," because it could not order either in large quantities. Review by the physician owners found that the medications were similar, so they persuaded their fellow physicians to managed with just one of them, and ordered that one in bulk, reducing the price by about 90%.
- The hospital had been paying much more for one medical device than it could charge for it. The physician owners got its supplier to reduce its price, simply by suggesting they might shop around for a new supplier.
- The physician owners were able to assemble paper charts in a uniform manner by using simple color-coded tabs, making it easier to find clinical data.
But again, the question is, how many of the managers and executives who run large health care organizations actually know much about health care on the ground? And in the absence of such knowledge, can they determine whether any drug, device, or service is under-, fairly, or over-priced relative to its cost of production? Furthermore, can they determine the relationship of the price to the value (benefit/harm) it bestows on the patient? The answers appear to be "not many," "no" and "no."
(See my previous postings on the issue of health care managers' and bureaucrats' inability to judge price in relationship to cost and to clinical value here, here, and here.)