Near Coeur Moelleux Lake, there is a non-profit hospital that holds 60 beds. They help the 40,000 residents and the 20,000 other residents from different communities. At this hospital there are 40% of physicians that are a part of a for-profit group called, Coeur Moelleux Medical Group. While the other 60% of physicians “operate of solo practice”.
QFCH and CMMG want to join together to create a Medicare Accountable Care Organization (ACO). They can do this under the Medical Shared Savings Program. Antitrust laws are a way to limit the way competing hospitals can work together. “The motivation for this trend include the pressures of healthcare cost containment, the effects of the economic downturn, and the needs of healthcare providers to position themselves for anticipated changes form health reform legislation” (Harris pg. 207). Quintuplet Falls is popular for the number of retired people and the number of people who are on Medicare. The result of the residents being so mature, QFCH and CMMG must combine for popular demand. The two groups are seen as competitors. There are regulations that permit merging from happening. Yet, there are certain exceptions. Both QFCH’s and CMMG’s proposed courses of action could give rise to certain antitrust issues. Section 1 of the Sherman Act states that “There must be a contract, combination, or conspiracy, which requires at least two independent parties that can agree, combine, and conspires with each other” (Harris pg. 200). There cannot be any boycotting, price fixing, and market allocation. That brings up a concerns when both are trying to reduce the spending per capita.They must do so in a unlawful way. Section 2 of the Sherman Act states that there should not be any monopolizing. Section 7 of the clayton act “prohibits mergers and acquisitions that might reduce the level of competition in the marketplace” (Harris pg 206). The courts have created a “safety zone” for small mergers to justify whether there has been a violation or not. Also, guidelines must be followed when it is a horizontal or vertical merge.
The shared saving approach is associated with quality measures, brought by ACO. The spending depends on how much of a shared savings they have left over. To my understanding the QFCH’s and CMMG is planning to reduce the average annual per capita spending between 1,100 to 1,300, below the benchmark in the first year. If ACO reduces Medicare spending while achieving specific quality standards. “ACO gets a share of the savings to Medicare (50-60%)” (ACO presentation Part 2). If they follow the quality standards, they should expect about 50% in shared bonuses.
As Dr. David C Pate describes it, in bucket 2, as low-value are even no value services. There is around 30-50% of the services being done. “Many of these services are procedures that may end up hurting patients, and some tests or procedures that should not have been done in the first place may lead to additional testing, procedures, morbidity, and even mortality” (David Pate blog). In order to reduce that the low value/ no value percentages, “ACO services different populations in variously structures reimbursement methodologies” (David Pate blog). By doing that, they will be able to reduce the cost and maintain the quality in the health care.