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Health System Change in Cleveland, Ohio
Round One Site Visit
he organization of health care delivery in the Cleveland area has changed dramatically during the past few years. These changes appear to have been driven by the actions of the private sector, particularly a few dominant hospitals, physician organizations and health plans. Cleveland is also characterized by a strong hospital safety net and a unique collaboration of employers and providers to evaluate hospital quality. The impact of these changes on the access, cost and quality of services is not yet known in any measurable terms. It seems likely that future changes will be driven by changes in public policy, most notably those that increase managed care in the Medicaid and Medicare programs.
Health care is an important feature of Clevelands economic landscape. Indeed, Cleveland is recognized as both a regional and a national referral center, and the health care industry is a major employer there. Clevelands hospitals historically have dominated the areas health care market. Of 43 hospitals in the Cleveland area, 17 are located in Cleveland, where the areas tertiary facilities are concentrated, and account for 56 percent of the areas hospital beds.1 Until the last few years, most of these facilities had well-defined local geographic and service markets, and overall there was a high level of stability in the hospital sector. Foremost among the reasons for this stability are:
But this historical stability has been upset during the past two years, as local providers have begun reaching out to attract patients beyond their traditional geographic or service areas. At least three factors have contributed to this push to secure or expand market share:
Providers and insurers have responded promptly to this new environment by attempting to lock in or expand their share of the market. They are reportedly accepting -- even offering -- prices at or below cost in order to gain market share. Hospitals and physician groups are merging or affiliating at a rapid pace and forming into large networks. Anticipating more extensive penetration of managed care, institutional providers are seeking to improve their market position by expanding the range of services they offer, purchasing physician practices to ensure volume and reorganizing to contract with managed care plans. Most respondents believe this process of change will continue for some time, eventually resolving into a regional health care system dominated by three or four large provider systems.
The configuration of these evolving systems and the relationships and balance of power among the provider, purchaser and insurance sectors remain uncertain. A number of factors will shape the outcome, including:
As noted, the impact of these changes on the delivery of care and on its cost, quality and accessibility is not fully known. Changes in the respective roles of generalist and specialist physicians may be taking shape, and interest in data to guide or evaluate practice appears to be increasing. Premium costs reportedly have flattened out in response to widespread health plan and provider discounting, but it is not clear that underlying provider costs have changed significantly.
The community generally views the quality of care as high, citing hospital report card data published during the past few years as evidence that quality has not declined. Access to care is not seen as a critical issue, probably because of favorable perceptions of the areas safety net providers. Some observers believe that the advent of mandatory Medicaid managed care will improve access. At the same time, concerns have surfaced about the impact of the recent acquisition of not-for-profit safety net hospitals by national investor-owned chains.