Hospitals Buy Practices, Raise Prices

Hospitals are buying doctors' practices as part of a wide-scale consolidation, then adding huge charges to bills. You need to defend yourself.

There was an interesting article in Medical Economics magazine titled, “Lopsided Value: Why cost may ‘level the playing field’ for independent, office-based physicians.” The article by Tammy Worth describes how, when a hospital system buys a physician practice, the hospital can then consider the doctor’s office part of its "outpatient" facility and therefore charge a facility fee in addition to the doctor’s professional fee. This holds true for when hospitals bill Medicare or private insurance carriers. As an example, the article states how an EKG at a doctor’s office cost $188 before it was bought by a hospital. If that same EKG is billed as an "outpatient" hospital service, it costs $452.89—more than twice as much, because of that additional facility fee. In another example, an office visit for a complex new patient appointment costs $200 at an physician practice not owned by a hospital. However, if the hospital buys the practice and charges the additional facility fee, the price goes up to $340—170% as much. Medicare and private insurance carriers have been slow to adjust their reimbursements, so, as of now, they are just paying these higher fees. What does this mean to employee benefits professionals and healthcare consumers?
  • If you do nothing to your plan, your costs will go up because the provider community is consolidating and using that consolidation to charge more. Even if your population does not use more medical services, your costs will go up because the cost per service is going up.
  • If you are a healthcare consumer and are going to doctor’s offices that are owned by hospitals, expect an additional facility charge and find out how much it will be in advance. It could double the price of your medical care. You might want to vote with your feet and go elsewhere.

Eric Bricker

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Eric Bricker

Eric Bricker, MD, a board-certified internal medicine physician, serves as the chief medical officer for Compass Professional Health Services. He co-founded Compass with Scott Schoenvogel and Cliff Sentell in 2005 to help change how healthcare is delivered to improve employee health and lower healthcare costs.


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