As hospitals acquire more private practices, insurance costs rise

From the AMA Morning Rounds:

On the front page of its Business Section, the Wall Street Journal (8/27, B1, Mathews, Subscription Publication) reports that it is becoming increasingly more common for hospitals to acquire private physician practices, and this may be contributing to higher costs for routine healthcare. In many cases, a service can increase in price after an acquisition, despite no change in procedure or location. This is due to the structure of insurance reimbursements, which are often more generous to hospitals than independent practices. Though the hospital industry says the growing rate of private-practice acquisitions will increase efficiency and improve quality, health insurance companies say that for now, it is just costs that are rising. 

As the forces that promote more consolidation of health care services continue, we can expect costs to also rise.  These policies will make the business of medicine more profitable but increase the personal cost to consumers.   In earlier blog postings I have commented on how the system (via Medicare reimbursement/CMS policies) perversely rewards hospitals while taking away from private practice physicians for the very same services.

-Raymond Kordonowy, MD

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