The Coming Collectivization of American Health Care

In the 1930s, the USSR forced independent farmers into large state-run collective farms. Despite possessing some of the richest farmland in the world, these collective farms could not feed the country. By the end of the Cold War, the USSR survived only by importing Western grain. Unfortunately, the United States is about to make the same mistake in health care by collectivizing doctors and hospitals into government-supervised accountable care organizations (ACOs).

Accountable care organizations represent the federal government’s latest attempt to “reform” American health care. Through financial carrots and sticks, doctors and hospitals would be “nudged” into large provider groups to deliver medical care according to government practice guidelines. The government would monitor ACO performance with mandatory electronic medical records, rewarding providers who met government performance targets and penalizing those who didn’t. ACO proponents claim these “integrated care systems” will raise quality, lower costs, and reduce regional variations in medical care.

Under this new system, the traditional 2-4 person small group medical practices many Americans are familiar with would rapidly become an endangered species. ObamaCare legislation requires doctors who accept Medicare patients to follow strict new documentation standards as well as to purchase (and make “meaningful use” of) government-approved electronic medical record systems. These requirements can impose enormous financial and administrative burdens on small medical offices. Coupled with declining reimbursements, many small practices will thus have an increasingly difficult time staying afloat.

Hence, many doctors are already choosing to merge into larger practices (or become hospital employees) to remain economically viable. In 2010, the Medical Group Management Association reported that 65% of established physicians hired and 49% of new physicians finishing residency chose to join hospital-based practices. Similarly, the American Medical Association reported that from 2001 to 2008, the number of physicians in solo practice fell from 37% to 25% and in small 2-4 person practices fell from 26% to 21%, with these numbers expected to decline even further.

Of course, it can be perfectly legitimate for physicians to voluntarily join large groups or become hospital employees. But it is wrong for the government to tilt the playing field to artificially favor such large groups over smaller practices.

The Obama administration regards this collectivization of medical providers as a desirable outcome, not merely some “unintended consequence.” As Obama health advisor Nancy-Ann DeParle wrote last year in the Annals of Internal Medicine, the new law will “accelerate physician employment by hospitals and aggregation into larger physician groups” and “physicians will need to embrace rather than resist change.” Translation: “Doctors should get with the program -- or else!”

Furthermore, such collectivization is merely a continuation of a much older strategy. Jonah Goldberg’s book Liberal Fascism described how the Roosevelt administration sought similar consolidations of American agriculture and business during the New Deal. As Goldberg noted:

[If] you want to use business to implement your social agenda, then you should want businesses themselves to be as big as possible. What’s easier, strapping five thousand cats to a wagon or a couple of giant oxen?