In a recent study, total expenditures for over 4 million patients by private physician groups or integrated groups covered by health maintenance organizations (HMOs) in California between 2009 and 2012 were analyzed.6 Mean annual expenditures were highest for large multihospital systems followed by hospital-owned physician groups and, lastly, physician-owned groups. The expenditures for multihospital systems were 19.8% higher and for local hospital-employed physician groups 10% higher compared to physician-owned organizations.
Why should prices increase after tighter physician hospital integration on a large scale? Market power. Once health systems have a large enough number of physicians in their panel, hospitals could charge insurers higher prices to access their specialists. Similarly, by employing a large number of physicians in a particular specialty, which then attracts a large pool of patients with a particular illness, they could dominate the other health systems in the region. One action specifically forbidden by anti-kickback laws is compensating physicians based on the number of referrals they make to the hospital. But, there are enough loopholes that allow hospitals to indirectly tie compensation to “productivity.” This may change with bundled payments or compensation tied to “value,” although there will always be incentives for work volume to some degree.
A further roadblock for basing merger decisions entirely on possible efficiencies is how the courts will see these activities in terms of antitrust actions. Most arguments using efficiency as the basis for merging physician groups with hospitals are vague and in general courts have not superseded antitrust actions with economic efficiency arguments.
What should be genuine reasons for hospitals employing and aligning with physicians? Addressing uneven quality of care, access and, of course, ever spiraling costs. If the object was to share responsibility for attacking these problems, health care systems and physicians would be cut a lot of slack. But, some health care systems want to not only survive the existing chaos but also dominate their local market.
I guess health care is really no different from Wall Street corporations in its focus on short-term gains versus long-term benefits. Until broader incentives change, health systems will continue to look to survive and gain market share and power. Competition, in isolation, drives tactics where the only objective may be to increase market share. However, it appears that the FTC will be busy wielding the Sherman Act of the antitrust law to keep a check on health systems to ensure consumers, payers, physicians, and the country at large are all on a fair playing field.7
Dr. Satiani is professor of clinical surgery, division of vascular diseases & surgery, department of surgery, associate director, FAME; director, Faculty Leadership Institute, and medical director, Vascular Labs, at Ohio State University College of Medicine, Columbus. He is also an associate medical editor for Vascular Specialist.
References
2. Journal of Health Economics 2006; 25: 1-28.
3. Journal of Health Economics 2006; 25: 29-38.
4. Health Affairs 2014; 33(5): 756-63.
5. www.ipr.northwestern.edu/publications/docs/workingpapers/2015/IPR-WP-15-02.pdf
6. JAMA. 2014; 312(16):1663-9.
7. Plastic & Reconstructive Surgery. 2006; 117(3): 1012-22.
NO
The days of hanging one’s shingle on a door and starting a self-employed practice are rapidly fading. While some fondly remember the practice of medicine as it was in Norman Rockwell’s classic “Before the Shot,” the realities of a current practice couldn’t be more different. Reusable syringes, analog weighing stations, an unaccompanied minor, and lack of regard for universal precautions are just a few examples from that painting that have long since disappeared. However, the humor in this painting comes from the young boy scrutinizing the doctor’s credentials, implying a sense of distrust and fear as he stands there with his buttocks partially exposed waiting for the vaccination.
This scrutiny of physician performance and results is more relevant today than ever before. Perhaps if we were to update the painting today, it would depict the boy furiously tapping away at his tablet searching through ProPublica to see what the doctor’s complication rate with the intended procedure truly is.
Dr. Moonir J. Haurani
This is just one of the many pressures physicians are facing today. Navigating the publicly reported complication data is but one tiny portion of the regulatory red tape physicians face in taking care of their patients. If you add in the need to negotiate and contact with insurers, manage an office staff, acquire and maintain an electronic medical record (EMR) while ensuring that your EMR is properly secured against potential cyber threats and compliant with meaningful use regulations, audit your billing and coding, keep up to date with upcoming changes to bundled payments, mail out and track Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), as well as an endless list of other requirements, it is no wonder physicians are less willing to take these challenges on as solo practitioners. In fact, based on Medscape’s 2014 Employed Doctors Report, which compiled responses from over 4,600 physicians, the top three reasons for being an employed physician were not having to deal with the business of running an office (58%), not having to deal with insurers and billing (45%), and guaranteed income/even cash flow (42%).1