A new study by Avalere Health for the Physicians Advocacy Institute (PAI) says that hospital-employed physicians increased Medicare costs for four services by $3.1 billion between 2012 and 2015.

Researchers said Medicare paid $2.7 billion more for  certain specific cardiology, orthopedic and gastroenterology services in hospital outpatient settings rather than in independent physicians’ offices. Meanwhile, Medicare beneficiaries paid $411 million more in out-of-pocket costs for those services than they would have in independent physicians’ offices during the period of the study.

An American Medical Association report said that nearly 33 percent of physicians worked in a practice with at least some hospital ownership in 2016. PAI, for its part, said the number of hospital-employed physicians rose 49 percent in 2012 to 2015.  Healthcare consolidation, especially health system mergers and hospitals’ hiring of previously independent physicians, are driving up healthcare costs as systems gain more pricing power.

The Avalere researchers attributed 27 percent higher costs for Medicare and 21 percent higher expenses for patients to hospitals’ hiring of previously independent physicians. The study noted that hospital-employed physicians “deliver a higher volume of services in the more costly hospital outpatient setting than independent physicians.”

To read the study, please hit this link.