Researchers found that when small practices of physicians join large hospitals, their patients pay an average of $75 more every year for such outpatient services as check-ups, although the number of appointments stays the same.
The Boston Globe reports that:
“With data from cities across the United States, the study is the first to document the cost of physician acquisitions by hospitals on a national scale.”
“Economists have known for decades that when hospitals merge, prices go up. If you’re the only shop in town, you can charge whatever you like, and insurance companies have no choice but to accept those prices. But it wasn’t clear what happens when smaller doctors’ offices join hospitals.”
“{I}f a hospital employs most of the doctors in a city, then insurance companies don’t have much choice but to accept the hospital’s prices, even if they are higher than what Medicare is willing to pay.”
“The same goes for physicians who join big hospitals. They suddenly gain the institution’s bargaining power, and can charge more.”
Physicians’ march into hospitals probably will continue because of the Affordable Care Act. That law encouraged integrating different parts of the healthcare system in the hope that it would eventually reduce costs. But some worry that providers will simply reorganize to deal lucratively with new payment models.
