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    Monopolizing medicine: Why hospital consolidation may increase healthcare costs


    hospital physician healthcare costsHospitals across the United States are merging and purchasing physician practices at a faster clip than they have in decades. While some experts believe the pace of acquisition is not sustainable, the economic forces driving hospital consolidation is also driving up the cost. For employed physicians, that could mean employment trouble. For independent groups, it could signal opportunity.

    The consolidation trend has been promoted by reform efforts seeking to reduce waste and reward value instead of volume, but these monopolizing forces are contributing to a rise in cost, according to recent studies. While independent practices struggle with payer pressures and management challenges, they are delivering a greater quality/value proposition overall. Some experts say it could be enough to tip the market. 

    Independent physicians have a strong move yet to play. Put simply, fighting to preserve physician autonomy may be one key to help rein in America’s enormous medical bills.

    That cost differential favoring independent physicians could theoretically give them a competitive advantage with insurers and patients, adds H. Christopher Zaenger, CHBC, chief executive officer of Z Management Group in Barrington, Illinois, and a Medical Economics editorial consultant, but it won’t be a factor until that information can become more publicly known.

    “Healthcare is less affordable than ever for the average American family,” according to the Association of Independent Doctors. “Independent doctors have a critical role in our nation’s ability to sustain affordable and high quality care.”

    Hospital acquisitions lead to higher prices

    Through mergers and acquisitions, hospitals have grown larger and gathered more physicians under their control in the last decade or so. More than 105 hospital mergers occurred in 2012, up from about 50 to 60 annually from 2005 through 2007, according to a January report in the New England Journal of Medicine.


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    • ChristopherMajdi
      I think we will see many more practice acquisitions by independent medical groups and private equity groups. For the most part, hospital acquisitions don't offer physicians much in the way of goodwill and intangibles. Given the focus on payment disparity issues by CMS and MedPac, as well as other operational concerns related to practice-hospital integrations, you're going to see a lot of these hospital deals fall apart. Overall I think the future climate bodes well for private practice physicians despite all the doom and gloom rhetoric. This is especially relevant for primary care providers given the reimbursement rebalancing related to health reform. - Christopher Majdi, MS, CHBC, CBA, CVA. http://transitionconsultants.com/articles/524-healthcare-mergers-and-acq...
      Selling out to a hospital or a system is exactly that "Selling out"
    • Anonymous
      Somehow I missed the part where higher fees for hospital based physicians is a bad thing. Hospitals aggregate physicians services giving them more leverage to negotiate higher fees. Private practice physicians have no leverage at all and have to accept whatever insurance companies grudgingly pay us. This is the reason most physicians have joined hospital groups and why private practice medicine is dying. Aside from the administrative burden it difficult to do business in an environment where the doc down the street working for the hospital is getting paid twice as much for any given service. Joining a hospital owned group gives a physician the opportunity to recoup some of the income that his been stolen from him over the years by large insurance companies who had all the power. Joining a hospital group balances the equation in favor of the physicians.
    • Anonymous
      Spoken like a physician looking for the "good old days" of medicine when high usual and customary charges were routinely paid. Though I agree that private practice physicians only leverage is to say no to low paying health care plans(often not really any leverage at all) it is important to recall that hospitals are institutions run with an eye toward growth and revenues, despite many of them hiding behind 'not-for'profit' status; and as institutions they will do whatever it takes to remain profitable. There is no loyalty to the physician employee, and unfortunately too many physicians are again learning this lesson. To join a hospital staff to receive the higher reimbursement(which in many instances the hospital keeps for itself) for the exact same service as provided in a physician office is short sighted and unsustainable for the health care system overall. Every house of cards comes down at some point.

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