The Bay Area's health care systems -- think Stanford, Sutter, John Muir and more -- are continuing to align and consolidate in different ways to expand across the region, a new analysis shows, and it's unclear if this will lead to lower or higher health care costs.
The report, from the Oakland-based California HealthCare Foundation (CHCF), serves as a summary of the transformation in the Bay Area's health care market over the last few years since the foundation's last report on the subject in 2012.
Maribeth Shannon, director at CHCF, referred to "an arms race."
"Providers see health plans consolidating and they want to have a similar level of leverage when they negotiate" with health insurers, she said. "The idea [is] that you have to be strong to get a good price in this market."
The analysis, conducted for the foundation by Mathematica Policy Research, called out three specific health system regionalization efforts and the different ways they were achieving their goals:
- Stanford Health Care reached across San Francisco Bay to acquire ValleyCare, based in Pleasanton. The goal of such an expansion, the report says, is for Stanford "to support an expansion of its health plan."
- UCSF and John Muir Health -- also on opposite sides of San Francisco Bay -- formed a partnership aimed at building a "network large enough to compete with systems like Kaiser and Sutter" throughout the Bay Area.
- Sutter Health, meanwhile, is consolidating its own operations. The foundation's report cites multiple rounds of reorganization over the past few years, and says Sutter now is attempting to merge its three Bay Area foundations with the goal of extending the successful Palo Alto Medical Foundation model to other sites. But the analysts predict that will be a tall order, given the foundations' different "histories and physician cultures."
And what of patients? Ha Tu, senior health researcher of Mathematica Policy Research and lead author of the study, predicts the increasing consolidation, "at least in the short term, will result in more provider competition and more choices for consumers, but over the longer term, it remains to be seen whether it's a sustainable thing."