Hospital-Owned Physician Groups Have 20% Higher Medical Costs

As hospital systems nationwide acquire more physician practices, everybody may be getting hurt.  A new study published in The Journal of the American Medical Association shows that hospital ownership of physician groups in California led to up to 20% overall higher costs for patient care. Employers and workers have to pay for these increased costs in the form of higher premiums, and consumers face higher prices with insurance deductibles rising.

For the study, data from 2009 to 2012 was analyzed, including nearly 160 medical groups and 4.5 million patients in California. Categories included groups owned by physicians, those owned by large hospital systems across several of the state’s geographic markets, and those owned by local hospitals or hospital systems.

According to the study, total spending was 10.3% higher per patient for hospital-owned physician offices compared with doctor-owned organizations.  When large health systems running multiple hospitals owned medical groups, costs were even higher. Compared with independent physician groups, per patient spending was 19.8% higher.

These physician groups are also under pressure to refer patients to more expensive imaging and other outpatient treatments that can be cheaper at free-standing clinics. It all brings into focus that the consolidation of physicians and hospitals into large mega-systems will not reduce costs, and will increase the cost of healthcare.

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