The U.S. spends over $4.5 trillion (that’s with a “t”!) on healthcare each year, which represents 17% of our total gross domestic product (GDP). With this staggering price tag, it’s not surprising that most of us consumers find healthcare too expensive – it’s actually the leading cause of personal bankruptcy in the U.S.1 As the largest insurer of Americans, the Center for Medicare & Medicaid Services (CMS) has either reduced – as in the case of professional reimbursement – or tightened reimbursement for the services it covers. The result has been declining financial performance for many hospitals and health systems.2
To create efficiencies and scale, consolidation has been happening at a rapid pace. A 2025 U.S. Government Accountability Office (GAO) analysis found that by the end of 2024, 47% of physicians were integrated with a hospital or health system. This is up from 30% in 2012.3 MedAxiom data shows that about three-quarters of cardiologists are now in such a consolidated environment.
On the hospital side, aggregation is also happening at a rapid pace. According to Kaufman Hall, there were 72 hospital/health system transactions in 2024, or more than one a week. This rate is projected to increase in the future.2 It’s important to note that consolidation does not occur exclusively through acquisition or hospital-to-hospital transactions. A 2025 KFF report highlights that horizontal (hospital/health system acquisition and/or merger of another hospital/health system) is a large piece of the consolidation pie, but we’re seeing more and more vertical (for example, an insurance company buying primary care) consolidation as well.
Taken together, these trends toward “scale and efficiency” suggest that critical decisions are being made increasingly farther from the “bedside,” a shift that can compromise the quality of patient care. There is a near zealous pursuit of “systemness” from executive leadership to standardize processes, contracts and alignment models. When this standardization leads to both increased efficiency AND effectiveness, great! My experience, however, is the opposite: organizations must devolve down to the lowest common denominator to achieve these standards, and the “product” – patient care – suffers.
The Paradox of Centralized Scheduling
One of my favorite examples of this is central scheduling. In my career, I have yet to hear a cardiovascular service line leader convincingly explain how great central scheduling works. From executive leadership, it is likely a triumph of labor optimization. By moving all scheduling operations to a centralized call center, the cost per transaction is lowered. So how about the customer side of this math?
A remote agent, following a rigid, standardized script, lacks the clinical experience to distinguish between a routine follow-up and a burgeoning heart failure exacerbation. When a patient is triaged into the wrong scheduling block or to the wrong provider or sent to an ill-equipped satellite office, the "saved" administrative dollars are instantly vaporized by office disruption, lost physician productivity, rescheduling and other downstream impacts. All of this speaks nothing to the clinical risk of delayed care, which we absolutely must value.
We have optimized the transaction at the expense of the product. This is bad math. |
The wRVU Trap: Reverting to the Lowest Common Denominator
Perhaps the most pernicious example of this trend is the pursuit of standards in physician compensation plan design. Hospitals and health systems routinely employ hundreds or even thousands of physicians across all specialties. Having unique reward systems for each individual would be an administrative nightmare to maintain, and there would almost undoubtedly be overlap between the models that could be standardized.
However, the emerging default in cardiology compensation plans is a straight work relative value unit (wRVU) production model. While this model is easy to administer, it is organizationally and clinically lazy. Even those who deploy it will acknowledge its value is in simplicity, not in the outcomes. (Are we hearing this?) In nearly 40 years of healthcare experience, I have yet to meet a physician who believes their only value to the patient and to the healthcare system is their personal clinical productivity.
As cardiology continues to subspecialize, a single patient with only one heart is likely treated by multiple physicians from electrophysiology to interventional cardiology to advanced heart failure. The lack of any recognition to the team effort in our compensation model is simply wrong. From decades of collective experiences over hundreds of cardiovascular programs, MedAxiom published a list of 10 attributes it finds in high-performing organizations (Figure 1). Number four on this list is: “Team is recognized over the individual.”
Figure 1: 10 Attributes of High-Performing Cardiovascular Programs
Almost once a week, I’ll hear from one of our member programs that they just aren’t getting the right behaviors from the physicians around organizational objectives and non-clinical activities valuable to the service line. The compensation model: straight wRVU production. We are paying for apples and expecting oranges. That’s on us (leadership), not on the physicians.
The Principle of Subsidiarity
Researching this blog, I came across a new word for my vocabulary: subsidiarity. In short, it means that a central authority should only perform those tasks that cannot be performed effectively at the local level. Yes! Note that it’s not about efficiency (cost per transaction) – it’s about effectiveness. Our first priority should be providing good healthcare. Only when we’ve made an activity effective should we focus on cost.
When we make decisions on clinical operations purely from a profit and loss perspective, bad things happen. It’s easy to examine a spreadsheet and see opportunities for consolidation and lower episode costs (efficiency) while losing sight of the product (efficacy). It used to be that the authority was in the same building as the accountability. In other words, I got to see and feel the decisions I made. That largely has gone away where authority may be in another building or even in another state. Someone else lives with the accountability.
My Final Word
To a system-level executive, a standardized process is a masterpiece of efficiency. It offers the allure of scalability and the comfort of predictable inputs. However, too often the promise of these standards is never realized, and the deciders don’t have to feel the consequences. If it’s easier to accept in financial terms, this seemingly easy (cheap) standardization pushes costs elsewhere that don’t get accounted for in the final analysis. We saved $1 here but added $2 there. Again, bad math.
The further we push decision-making away from the bedside, the more we increase the opportunity for devastating consequences in patient care. This isn’t hyperbole; I’m hearing real-life examples far too often. To our executives, please consider this as you lead your organizations. It matters to me for many reasons, but perhaps chief among them . . . I just might be in one of those beds someday.
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Illustration by Lee Sauer.