Benjamin Domenech at the Heartland Institute quotes a Wall Street Journal 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.
“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 higherspending as well, because the program pays more for some services performed in a hospital facility.
Read more: Cost Increases? Consolidation Makes it Happen.
- Fiscal Times, “Monopolies Threaten Health Care Cost Controls“
- Center for Studying Health Systems Change,* “Wide Variation in Hospital and Physician Payment Rates Evidence of Provider Market Power”
* That’s not a very good name for an organization, I must say.
- Government Encourages Hospital Consolidation, Sues Hospitals for Consolidation“ at Reason, “