One hospital trend that appears to be accelerating? Acquisitions. Over the past 12 months, hospitals acquired 5,000 independent physician practices. The number of physicians employed by hospitals rose by 14,000, or 11 percent on a year-over-year basis. With regulatory burdens not going anywhere and the payment policies mandated by insurers favoring large health systems over independent physicians, it’s no surprise. But what does it mean for the healthcare landscape?
It’s becoming harder and harder for physicians to maintain independent practices. Today, less than half of physicians own their own practices. In many ways, it is similar to what’s happening in the banking world. Regulatory costs can be more easily absorbed by large institutions. The growing importance of healthcare technology has also become a differentiator that favors large health systems with larger budgets. This trend especially will drive acquisitions in 2018.
Research shows that an increase in hospital-employed physicians leads to increased Medicare costs, per research performed at Avalere. A sharp rise in Medicare costs ($3.1 billion) was reported between 2012 and 2015. Medicare beneficiaries were financially responsible for $411 million more than if the same services had been performed by independent physicians’ offices,
A study at Northwestern University’s Kellogg School of Management in Chicago, meanwhile, found that prices for physician services rose 14 percent on average after acquisitions. What isn’t clear from the research is whether quality improved as a result. Stay tuned!
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