GE Healthcare Camden Group Insights Blog

Study: Medical Costs up to 20% Higher with Hospital-Owned Physician Groups

Posted by Matthew Smith on Nov 7, 2014 3:14:00 PM

New Study, PhysiciansRaising fresh questions about healthcare consolidation, a new study shows hospital ownership of physician groups in California led to 10% to 20% higher costs overall.

The UC Berkeley research, published in the October Journal of the American Medical Association., illustrates the financial risks for employers, consumers and taxpayers as hospital systems nationwide acquire more physician practices.

“I think this consolidation wave is virtually unstoppable,”said James Robinson, the study’s lead author and a UC Berkeley professor of health economics. “Left to itself, it will increase the cost of healthcare.”

Total spending per patient was 10.3% higher for hospital-owned physician offices compared with doctor-owned organizations, according to the study.

Costs were even higher when large health systems running multiple hospitals owned medical groups. Their per-patient spending was 19.8% higher compared with independent physician groups.

The JAMA study examined total medical spending for about 4.5 million HMO patients in California from 2009 to 2012. The data didn’t include patients with commercial PPO coverage, Medicare or Medicaid.

These figures reflect the total cost of care, including hospitalizations, prescription drugs and physician visits. The data were obtained from the Integrated Healthcare Association., which includes insurers and medical providers.

Researchers adjusted for differences in patients’ health and variation in costs by region.

These mergers between hospitals and physician groups are often touted as a way to better coordinate care, eliminate unnecessary tests and treatments and ultimately reduce costs.

Provisions of the Affordable Care Act encourage healthcare providers to collaborate more and shift away from conventional fee-for-service medicine.

Read the full article from the Los Angeles Times: Study: Medical costs up to 20% higher with hospital-owned physician groups


Topics: employed physician practices, JAMA, Employed Medical Practice, Employed Physician Groups, Hospital-Owned Physician Groups

Quick Survey: Participation in a Clinically Integrated Network

Posted by Matthew Smith on Sep 17, 2014 3:42:00 PM

Survey, online surveyAs healthcare costs continue to rise, payers are putting pressure on all providers to deliver more coordinated care. Hospitals and physicians are now expected to collaborate to improve outcomes, reduce utilization and control costs.

What does this mean for medical practices? Physicians have only a few options.

One alternative is to seek employment by a hospital or health system. The benefit of employment is a certain level of income security for physicians. The downside, of course, is loss of autonomy.

The second alternative is to remain independent. While this option preserves physician control, it exposes doctors to new risks. In the coming years, payers will continue to put pressure on physicians to accept lower reimbursement. Physicians’ negotiating leverage will continue to decline.

Fortunately, a third alternative is now emerging—clinical integration between physicians and hospitals. A clinically integrated network allows physicians to work collaboratively with a hospital, other physicians and post-acute providers. Under the right legal structure, clinical integration allows physicians to maintain independence while benefiting from joint contracting based on quality outcomes and cost management.

Please answer this quick survey regarding your organization's participation in a clinically integrated network. Your responses are anonymous. Questions 1 & 2 pertain to hospital personnel. Questions 3 & 4 pertain to medical practice personnel.
Results will be shared in a HD Insights Blog post next week. Thank you for your participation. (Please note scroll bar within survery.)


Topics: Clinical Integration, CIN, Clinically Integrated Networks, Survey, Medical Practice, Employed Medical Practice

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