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JAMA: How Physician-Hospital Integration Drives Up Cost

posted by Alicia Caramenico

on October 27, 2015

Hospital employment of physicians and ownership of physician practices continues to increase, bringing prices along for the ride, according to an article in JAMA Internal Medicine.

Using national commercial insurance data from 2008-2012, the JAMA study found that greater increases in physician-hospital integration was associated with greater increases in outpatient spending. With no changes in use of outpatient services, the increase was driven almost entirely by price hikes. The research also found that while such integration increases prices, it has not led to gains in health care efficiency.

“Consistent with prior research, physician-hospital integration was not associated with lower utilization, suggesting that this form of provider consolidation has not led to gains in health care efficiency in recent years through improved care coordination or management,” according to the study.

While the rhetoric behind the more physicians joining or being acquired by hospitals is still greater efficiency and cost savings, “this does not seem to be the case,” an accompanying JAMA commentary states.

So what is the case? Hospital employment of physicians and physician group ownership strengthens their bargaining power in price negotiations with insurers – demanding higher reimbursements rates for services and pushing up health care costs for consumers.

It’s through collaboration between health plans and providers that improvements in affordability and quality will be possible and permanent. Health plans remain committed to partnering with hospitals and physicians across the country to improve care delivery, promote care coordination, and encourage accountability for clinical outcomes.