
Hospital Acquisition of Independent Physician Practices Continues to Increase
Between July 2015 and July 2016, hospitals acquired 5000 independent physician practices, and the number of physicians employed by hospitals grew by 14,000, according to a report from Avalere Health and the Physicians Advocacy Institute.
Hospital acquisition trends continue to persist, according to a
During the time period, the number of physicians employed by hospitals grew by 14,000, also representing an 11% increase in employed physicians. According to the report, every region of the country saw an increase in both hospital ownership of practices and physician employment. The rate of hospital-owned practices increased between 8% and 47% in every region in the country, and the rate of hospital-employed physicians increased between 5% and 22%.
“As payers and hospitals drive consolidations across the healthcare system, it is becoming more and more difficult for a physician to maintain an independent practice,” said Robert Seligson, president, PAI, and chief executive officer of North Carolina Medical Society, in a
These trends represent the fourth consecutive year of growth in hospital acquisition of practices and physician employment. Over the past 4 years, the percentage of hospital-employed physicians increased by more than 63%, with increases in nearly every 6-month time period. Regions nationwide saw an increase in hospital-owned practices at every measured time period, ranging from 83% to 205%.
Regionally, more than half of physicians in the Midwest were employed by hospitals, and more than one-third of Midwest physician practices were hospital owned in 2016. Rates of employment were lowest in the south, where 37% of physicians were employed by hospitals, and in Alaska and Hawaii, where 33% were employed.
“When physicians are employed by hospitals or health systems, they perform more services in a hospital outpatient department setting (HOPD) than independent physicians,” states the report. “The higher proportion of services performed in a HOPD setting increases both costs to the Medicare program and financial responsibility for patients.”
According to the report, for cardiac imaging, colonoscopy, and evaluation and management services, Medicare pays more across an episode of care when patients receive services in a HOPD setting. For cardiac imaging, it costs $5148 for an episode of care in an outpatient department, compared to $2862 in a physician office; for colonoscopy, it costs $1784 for an episode of care in an outpatient department, compared to $1322 in a physician office; and for evaluation and management services, it costs $525 for an episode of care in the outpatient department, compared to $406 in a physician office.
A recent
The Avalere Health and the PAI report builds upon a prior
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