Hospital consolidation necessary to reduce health care costs?

Cleveland Clinic CEO Dr. Toby Cosgrove on the need for consolidation on the future of Obamacare and efforts to reduce health-care costs.

Cleveland Clinic CEO Has a Warning for All U.S. Hospitals

By Business Leaders FOXBusiness

Fixing America’s health care system is more than addressing rising costs according to Dr. Toby Cosgrove, CEO of the Cleveland Clinic, one of the most technically advanced medical facilities in the country.

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“I think the delivery system has to recognize that we have to take cost out and we have to do it through efficiency,” he told the FOX Business Network’s Maria Bartiromo.

He adds that consolidation specifically would give hospitals more purchasing power and avoid duplication of services without substantially raising costs.

“Hospital occupancy across the United States is about 65%. For example, in Ohio, we have 202 hospitals across the state. One of the concerns right now is with decreasing payments that hospitals are getting for their services they provide, we are seeing almost a quarter of the hospitals now running in the red. So ultimately, if we do not see consolidation and increase efficiency, we are going to see hospital closures across the country,” he said.

Cosgrove expects to see more consolidation across other aspects of the health care industry as well.  

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“I think we are going to see consolidation across the insurance industry…across the pharmaceutical industry…across devices and I think we are going to see it amongst the hospital providers.” He added: “This is what the response is to the demands to have more efficiency in our health care delivery system. There’s no question that if the insurance industry consolidates, we are going to have to consolidate as providers who negotiate with them,” he said.

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The Cleveland Clinic CEO also stressed the importance of keeping the current 20 million people with health insurance covered.

“We have to continue to keep those people covered otherwise the premise for hospitals of more patients, even though we are being paid less, is going to cause more and more hospitals to have major economic problems. We need to continue to cover those individuals, the question is how we do it, and we do it most efficiently,” he said.

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