Physician-Hospital Mergers Boost Prices, Spending for Outpatient Care

A new JAMA Internal Medicine study links hospital acquisitions of physician practices with increased spending on outpatient care. The findings, according to The Wall Street Journal reports, “will fuel debate over the impact of the merger boom sweeping through health care.”

The study looked at changes in physician-hospital integration in 240 cities between 2008 and 2012 and associated changes in spending. Despite “minimal” increases in the use of outpatient services, researchers found increases in outpatient spending “driven almost entirely by price increases.”

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Physician practices that merge with hospitals typically have more influence in negotiating with insurers for higher rates than independent physician practices, The Wall Street Journal explained.

“The market power that is in the hospital’s hands is conferred to the physician practice,” researcher J. Michael McWilliams, associate professor, Harvard Medical School, told the newspaper.

Using a conservative definition of physician-hospital integration, researchers found that, on average, 21.3% of the physicians in the cities included in the analysis worked for a hospital-owned practice by the study’s end. At the start of the study, only 18% did.

In a city with a 5% increase in physician-hospital integration over the 4-year span, annual outpatient spending would increase an average $75 per enrollee. According to The Wall Street Journal, the spending increase for a patient whose primary care practice merged with a hospital would be more extreme—about $1400.—Jolynn Tumolo

References

1. Wilde Mathews A. Outpatient medical care prices are rising, study shows. The Wall Street Journal. October 19, 2015.
2. Neprash HT, Chernew ME, Hicks AL, Gibson T, McWilliams M. Association of financial integration between physicians and hospitals with commercial health care prices. JAMA Internal Medicine. 2015 October 19. [Epub ahead of print].