I blog about free markets in medical care and transparent pricing.
The Wall Street Journal’s Anna Matthews wrote the following article:
After David Hubbard underwent a routine echocardiogram at his cardiologist’s office last year, he was surprised to learn that the heart scan cost his insurer $1,605. That was more than four times the $373 it paid when the 61-year-old optometrist from Reno, Nev., had the same procedure at the same office just six months earlier.
David Hubbard in his Reno, Nev., neighborhood. As a cardiology patient, he became caught up in a structural shift in the U.S. health-care industry.
“Nothing had changed, it was the same equipment, the same room,” said Dr. Hubbard, who has a high-deductible health plan and had to pay about $1,000 of the larger bill out of his own pocket. “I was very upset.”
But something had changed: his cardiologist’s practice had been bought by Renown Health, a local hospital system. Dr. Hubbard was caught up in a structural shift that is sweeping through health care in the U.S.—hospitals are increasingly acquiring private physician practices.
Hospitals say the acquisitions will make health care more efficient. But the phenomenon, in some cases, also is having another effect: higher prices.
As physicians are subsumed into hospital systems, they can get paid for services at the systems’ rates, which are typically more generous than what insurers pay independent doctors. What’s more, some services that physicians previously performed at independent facilities, such as imaging scans, may start to be billed as hospital outpatient procedures, sometimes more than doubling the cost.
The result is that the same service, even sometimes provided in the same location, can cost more once a practice signs on with a hospital.
Major health insurers say a growing number of rate increases are tied to physician-practice acquisitions. The elevated prices also affect employers, many of which pay for their workers’ coverage. A federal watchdog agency said doctor tie-ups are likely resulting in higher Medicare spending as well, because the program pays more for some services performed in a hospital facility.
Renown said in a statement that cardiologists moving into hospital employment helps “eliminate duplication, improve coordination, and reduce hospitalizations,” and with “more proactive management of patients with heart disease, we are working to improve the health and well being of our patients.”
This year, nearly one-quarter of all specialty physicians who see patients at hospitals are actually employed by the hospitals, according to an estimate from the Advisory Board Co. That is more than four times as many as the 5% in 2000. The equivalent share of primary-care physicians has doubled to about 40% in the same time frame. Traditionally, most doctors who see patients at hospitals are in independent practice.
The structural shift is being driven partly by declining reimbursements for physicians, particularly in certain specialties like cardiology. Doctors are also being pressed to make new investments, such as introducing electronic medical records, and some are attracted to the idea of more regular hours with fewer administrative headaches.
Hospitals say they are bringing in physicians to improve care, integrate services and reduce waste, efforts encouraged by the Obama administration’s federal health-overhaul law. Higher reimbursement is needed in some cases, they say, because it costs more to operate outpatient clinics, which must meet strict regulatory requirements and often treat patients who lack insurance.
The title? ”Same Doctor Visit, Double the Cost.” Old news.
G. Keith Smith, M.D.