Surge in hospital-owned physician practices poised to increase healthcare costs
- Independent physicians and physician-owned practices could soon become a rare breed, suggests a new analysis by Avalere Health and the Physicians Advocacy Institute (PAI) released Wednesday.
- The study found the percentage of physicians employed by hospitals or health systems rose 86% from 2012 to 2015, from 95,000 to more than 140,000.
- As of mid-2015, 38% of all U.S. physicians were employed by hospitals and health systems, findings show.
- Also from 2012 through 2015, hospitals acquired 31,000 physician practices, resulting in one in four medical practices being hospital-owned.
The diminishing existence of non-hospital owned practices and independent physicians can be expected to impact the practice of medicine and its costs.
A previous PAI/Avalere analysis this year reported that Medicare pays up to three times more for three common healthcare services if they are performed in a hospital outpatient department vs. a physician-owned practice.
“Medicare spends less when patients receive treatment in a physician’s office, yet the number of physician-owned medical practices is rapidly shrinking,” PAI Executive Vice President Kelly Kenney said in a prepared statement, arguing that the shift will mean increased costs for the entire healthcare system. "For patients, it impacts both where they receive and how much they pay for care,” Kenney said.
Recent data from the Bureau of Labor Statistics concurs that employment of physicians and surgeons is growing, estimating it will increase 14% between 2014 and 2024, “much faster than the average for all occupations.” In addition, an Accenture report recently predicted that just one in three physicians will still be independent by the end of this year.
The shift, attributed to numerous factors including pressures and incentives related to the Affordable Care Act that favor consolidations and acquisitions, comes with other pros and cons for physicians and hospitals. However, from a healthcare cost perspective, it presents a concern around current Medicare payment policy, which PAI has challenged before.
Healthcare Dive has previously reported on strategies physicians in small practices and solo practitioners can use, such as how to make the best out of health IT and how to streamline transitions into hospitals, that could help them succeed amid the major changes in the industry.
- Avalere Health HOSPITAL OWNERSHIP OF PHYSICIAN PRACTICES INCREASES NEARLY 90 PERCENT IN THREE YEARS
- Healthcare Dive Strategies small medical practices should consider in the face of industry change
- Healthcare Dive Big IT ideas for small practices
- Healthcare Dive When hospitals buy up independent physicians: Tips for a smooth transition