By Chad Terhune
September
4, 2018
Hospitals
have gobbled up nearly 40 percent of physician practices in California, leading
to higher bills for patients, a new study shows.
Just a
quarter of practices were owned by hospitals eight years ago, according to
the study published Tuesday
in the journal Health Affairs. That type of rapid industry consolidation was
associated with higher prices for primary care visits and treatment from
specialists.
In
areas with both high levels of consolidation among hospitals and between
hospitals and physicians, researchers estimated there was a 12 percent increase
in premiums on California’s health insurance exchange from fall 2013 through
2016, beyond the general rise in medical costs.
Acquisitions
of physician practices by hospitals tend to be small and typically fly under
the radar, said Richard Scheffler, the study’s lead author and professor of
health economics and public policy at the University of California-Berkeley.
“But
when you add them up, they are having an impact on outpatient prices and
Affordable Care Act premiums,” he said. “I call it conglomerate care.”
He said
the change in California hospital-physician ownership is more recent compared
with the earlier consolidation within the hospital industry and among insurance
companies, which also pushed up prices.
(Scheffler
et al./Health Affairs)
The
percentage of California primary care physicians in practices owned by
hospitals increased from 26 percent in 2010 to 38 percent in 2016, the study
found. For the same period, the percentage of specialists in such practices
jumped from 20 percent to 54 percent. For all physicians, the statewide figure
grew from 24 percent to 39 percent, according to the study’s authors.
The
steady decline of inpatient admissions has upended the normal business model
for hospitals, and big systems are seeking more control over where patients get
care outside their walls. The general trend toward buying doctors’ practices
had been known, but the findings in the Health Affairs study make clear how big
a change it is. Until recently, however, consolidation among insurers or hospital
systems has attracted more attention from regulators and lawmakers.
A
similar wave of hospital-physician consolidation has occurred nationally. From
2010 to 2016, the national share of office-based physicians who worked in
hospital-owned organizations has increased from 30 percent to 48 percent,
according to Scheffler and his co-authors.
Hospital
and physician groups defend these mergers as good for patients, saying they
help coordinate care that is often fragmented, duplicative and wasteful. The deals
enable them to deliver care that’s less expensive and to negotiate more
effectively with giant insurance companies, they say.
Carmela
Coyle, chief executive of the California Hospital Association, said the study
has serious flaws, drawing conclusions about supposed cost increases due to
consolidation that aren’t supported by the data.
“These
authors start from a place where consolidation and market concentration is
bad,” Coyle said. “Our experience in health care suggests that bringing
providers together can be a very good thing for communities and the patients
they serve. It often preserves access and allows physicians to stay in the
community.”
But
critics of consolidation say that as large health systems gain market power,
they can dictate where patients go for expensive tests and procedures. Some
hospitals tack on “facility fees” for outpatient care, which boosts costs even
further.
“These
mega-enterprises are buying up everything and when you sit down to contract
with them it’s ridiculously expensive,” said Glenn Melnick, a health care
economist at the University of Southern California.
For
instance, Northern California, where a few large health systems dominate the
market and own many physician practices, has become the most expensive place in
the country to have a baby.
Melnick
co-authored a separate paper in
Health Affairs, also out Tuesday, that described how a steady erosion of
competition among hospitals in California has contributed to rising health care
costs.
The
prices paid by health plans to California hospitals declined by 26 percent from
1995 to 1999, a period when managed care was aggressive at negotiating lower
prices. But a consumer backlash against tight controls on care and patient
choice ensued, and that trend began to reverse in the early 2000s.
Prices
increased by 238 percent from 2001 to 2016 — despite a 10 percent drop in the
volume of care for commercially insured patients over that same period.
“Competition
was working before, and now that competition has eroded,” Melnick said.
Some
health care economists say hospitals and physician groups don’t need to merge
in order to collaborate on patient care and that contracting could suffice
without diminishing competition through outright acquisitions.
Antitrust
enforcers are now giving such consolidation more scrutiny.
In
March, California Attorney General Xavier Becerra sued Sutter Health,
accusing the health system of overcharging patients for years and illegally
driving out competition in Northern California. Part of that case centers on
Sutter’s big medical groups, which are a key source for patient referrals and
admissions into Sutter facilities. Overall, the nonprofit chain has 24
hospitals, 36 surgery centers and more than 5,500 physicians in its network.
Sutter
denies any anticompetitive behavior and touts the benefits of offering patients
a broad array of services. “Our integrated network of high-quality doctors and
care centers aims to provide better, more efficient care — and has proven to
help lower costs,” Sutter said in a recent statement.
Other
states have pursued legal action on this front. Last year, for instance, the
Washington state attorney general’s office sued Catholic Health Initiatives’
Franciscan Health system to unwind its acquisition of two
medical groups, saying those deals violated antitrust law and would harm
consumers.
Meantime,
California lawmakers have tried to ban certain contracting practices used by
large health systems, such as “all or nothing” provisions that force health
plans to accept all of their facilities and medical groups systemwide. However,
for the second consecutive year, SB 538 failed to
advance amid opposition from the hospital industry.
Of
course, the doctor’s office — whether it’s owned by a hospital or not — isn’t
the only option for many consumers nowadays. Many people visit clinics run by
retailers, such as CVS, or talk to a doctor through an app on their smartphone.
Scheffler
said his study didn’t examine whether the quality of care had improved under
hospital-controlled physician practices. He said, however, that the evidence of
any quality improvement is thin so far, and he challenged providers to make
their case.
“We
want them to integrate care,” Scheffler said. “But if it’s giving them market
power and increasing prices, is it worth it?”
Chad Terhune: cterhune@kff.org, @chadterhune
No comments:
Post a Comment