When Hospitals Buy Practices, Insurers, Patients Pay the Piper
Written by Editor   
Tuesday, May 13, 2014 11:01 AM

A new study gives ammunition to what health economists and health insurers have argued for years: When hospitals buy physician practices, the result is usually higher hospital prices and increased spending by privately insured patients.  The study was based on an analysis of 2.1 million hospital claims from workers of self-insured employers between 2001 and 2007. The analysis by Stanford University researchers found prices were most likely to increase when hospitals bought physician practices, as opposed to hospitals forming looser contractual relationships with physicians.

Hospitals have increasingly bought physician practices over the past decade, arguing it helps them coordinate care and control costs. But insurers and many economists say hospitals' main motivation is negotiating higher prices with insurers and building referrals to grow admissions.

The Affordable Care Act has accelerated the trend by encouraging the establishment of Medicare accountable care organizations that pay large groups of providers based on how well they control costs and improve quality.

The Federal Trade Commission has been watching the growing collaborations between hospitals and physicians, and until now has intervened to stop them only when one organization controls so many physicians in one community that it is considered anti-competitive. Experts say the Stanford study could give the FTC ammunition to more closely examine and potentially block future hospital purchases.

"The message from the study confirms that when doctors and hospitals merge it may not be in consumers' best interest," said Daniel Kessler, a study co-author and law and health policy professor at Stanford.

Source:  http://www.medpagetoday.com/PracticeManagement/PracticeManagement/45654