Obama's health law has accelerated marketplace change

— -- After 34 years in private practice, Indianapolis orthopedic surgeon Philip Ireland last summer gave up his independence. He became an employee of Indiana University Health, which has been gobbling up hospitals and physician practices around the state to give it greater leverage with health insurers, boost referrals and improve care.

Ireland says he no longer worries about the costs of running his own practice and believes his patients are getting better care. For example, days before he performs a knee or hip replacement, he now meets with a team of nurses, therapists, social workers and other support staff to tailor a plan to each patient.

Ireland's home state of Indiana is one of 26 arguing this week before the Supreme Court to overturn the 2-year-old health care law. Nevertheless, its health care market has been undergoing rapid transformation in part as a result of the law. And most of those changes will continue regardless of how the court rules in June, or who wins the White House in November. The shifts did not originate with the law, but they have accelerated greatly since its passage because the federal government is changing how it pays doctors and hospitals, from a system that rewards volume to one that rewards quality.

More consumers in Indianapolis, for instance, are getting their care from doctors employed by large health care organizations, which are collecting and sharing their medical records electronically and beginning to be rewarded for keeping patients healthier and holding down costs — largely by keeping them out of the hospital.

While Ireland said he didn't sell his practice because of the law, it made him glad he did. "The integration of hospitals and doctors is the wave of the future, and I'm glad to be on the tip of the wave rather than behind it," he said.

"The pace of change in health care in the past two years collectively outpaces what you've seen in the past decade," said Michael Biggs, senior managing director of FTI Healthcare, a large health care consulting firm. "The provider industry is realizing the model of health care will change despite what happens in Washington."

Hospitals getting bigger

Last year, there were 86 hospital mergers, up from 75 in 2010 and 51 in 2009, according to Irving Levin Associates of Norwalk, Conn. The pace of doctors selling their practices to hospitals or larger doctor groups is also up. Last year, about 100 physician groups were sold, mostly to hospitals, up from 63 in 2010, according to Levin Associates.

Those organizations are expected to get even bigger as they seek greater efficiencies and pursue creation of accountable care organizations to take advantage of new payment systems under the law that reward quality and coordination, rather than volume of services, according to a report early this month by Moody's Investors Service.

It is way too early to predict whether these changes are leading to better, more efficient care on the model of the Mayo Clinic in Minnesota or Geisinger Health System in Pennsylvania, as advocates of the law had envisioned, or whether they will simply create health care behemoths that have the market leverage to increase prices at will.

"It could mean caregivers get more leverage over payers, which can lead to higher prices," says Alan Sager, professor at Boston University School of Public Health.