The Coming Collectivization of American Health Care

by | Jul 19, 2011 | Healthcare

The Obama administration regards this collectivization of medical providers as a desirable outcome, not merely some “unintended consequence.”
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?

Similarly, it will be much easier for the federal government to regulate 100 large ACOs than 10,000 small private practices.

Once doctors are herded into ACOs, they will become increasingly accustomed to simply following orders from ACO administrators (who in turn will be proxies for government health bureaucrats). The New York Times recently reported that after physicians became hospital employees, they became much more accepting of government controls over health care than their counterparts in private practice.

ACOs also threaten to corrupt the doctor-patient relationship. Suppose you see your ACO doctor for a severe headache and he says, “Don’t worry, you don’t need an MRI. Just take two Tylenol and call me in the morning.” Can you be sure he’s giving you his best medical advice — without being biased by the performance bonus he’ll receive if he orders fewer tests this year?

In 2009, when a federal task force proposed restricting screening mammograms to women over age 50 at two year intervals, they met stiff resistance from doctors who argued the proven benefits of annual mammograms beginning at age 40. The government quickly backed down. But once the current generation of doctors fades from the scene, will the next generation of more docile physicians be as willing to defend their patients’ medical interests if they conflict with practice guidelines set by their government paymasters?

Nor will ACOs necessarily save money. A recent 5-year trial followed ten carefully chosen large medical organizations that implemented “integrated care” practices similar to the proposed ACOs. Because of associated increased administrative costs, they only saved a minimal amount of money. As former Medicare administrator Gail Wilensky noted, “If it was this tough for this group that I had just assumed would be hands-down winners, what does it say for groups that don’t have a long history of coming together?”

Collectivizing American doctors will fail as badly as collectivizing Soviet farmers. Fortunately, it’s not too late for America to change its course. Instead of collectivizing physicians and hospitals, we should adopt free-market health care reforms such as advocated by Tea Party physician-activist Dr. Milton Wolf and Whole Foods CEO John Mackey. These reforms include fixing the tax code to put employer-provided health insurance and individually-owned health insurance on a level playing field, repealing costly mandates specifying which benefits insurers must offer, allowing individuals to purchase health insurance across state lines, and eliminating monopolistic medical licensing requirements that prevent doctors from practicing across state lines. Such reforms would lower costs and improve access while protecting the autonomy of both doctors and patients.

The Roman Emperor Caligula once wished that the Roman people had only one neck, so that he could slay them with a single blow. If we value our lives, we shouldn’t allow the federal government to put all doctors’ necks into a single noose either.


This article originally appeared at PajamasMedia and is appearing on Capitalism Magazine with PJM’s permission. You can read the original article here.

Paul S. Hsieh, MD, is a physician in practice in the south Denver metro region and he is a founding member of the Colorado group "Freedom and Individual Rights in Medicine" (

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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