Hospitals' acquisitions of physician practices are often rationalized as a strategy to increase efficiency, but a Wall Street Journal report suggests the strategy can lead to higher prices for patients and rate increases for insurers.
Nearly 25 percent of all specialty physicians who see patients at hospitals are hospital-employed, according to the report — a fivefold increase from the 5 percent of specialists who were hospital-employed in 2000. The number of employed primary care physicians has doubled to roughly 40 percent in the same time span.
Physicians employed by hospitals — a scenario on a considerable upswing — are likely to see more generous reimbursement. Compared with independent physicians, hospitals can negotiate higher reimbursement rates with commercial payors due to stronger market power, and Medicare pays "substantially more" for certain procedures if performed at a hospital, according to the report.
A 15-minute visit to a physician may cost Medicare about $70 at an independent practice whereas it runs closer to $124 if billed as a hospital-outpatient service. The report also cites prices from WellPoint for spine MRIs in Nevada. The procedure would cost $319 to $742 at a freestanding clinic, but $1,591 to $2,226 at a hospital.
Juan Davila, senior vice president for network management at Blue Shield of California, said "there is a tangible, or sometimes really, really high increase in what we pay doctors" once a group links up with a hospital system, according to the report.
Richard Umbdenstock, CEO of the American Hospital Association, said, "You put a hospital name on something, and the expectations change immediately," according to the report.
Study: Specialists Treated 41% of Primary Care Visits in 2007
Pay-for-Performance or Pay-for-Manipulation?
Nearly 25 percent of all specialty physicians who see patients at hospitals are hospital-employed, according to the report — a fivefold increase from the 5 percent of specialists who were hospital-employed in 2000. The number of employed primary care physicians has doubled to roughly 40 percent in the same time span.
Physicians employed by hospitals — a scenario on a considerable upswing — are likely to see more generous reimbursement. Compared with independent physicians, hospitals can negotiate higher reimbursement rates with commercial payors due to stronger market power, and Medicare pays "substantially more" for certain procedures if performed at a hospital, according to the report.
A 15-minute visit to a physician may cost Medicare about $70 at an independent practice whereas it runs closer to $124 if billed as a hospital-outpatient service. The report also cites prices from WellPoint for spine MRIs in Nevada. The procedure would cost $319 to $742 at a freestanding clinic, but $1,591 to $2,226 at a hospital.
Juan Davila, senior vice president for network management at Blue Shield of California, said "there is a tangible, or sometimes really, really high increase in what we pay doctors" once a group links up with a hospital system, according to the report.
Richard Umbdenstock, CEO of the American Hospital Association, said, "You put a hospital name on something, and the expectations change immediately," according to the report.
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Building a Competitive Model for Market Share and Primary Care: Q&A With Marc HalleyStudy: Specialists Treated 41% of Primary Care Visits in 2007
Pay-for-Performance or Pay-for-Manipulation?