Introduction to Hospital Acquisitions
As more hospitals have gobbled up private physician practices, costs for childbirth and other services have gone up, according to a new study. Since the early aughts, the share of physicians in the United States working for hospitals has nearly doubled, according to the study published by the National Bureau of Economic Research, a nonprofit research organization.
The Rise of Hospital Employment
And as fewer doctors work in physician-owned practices, patients or their insurers end up paying more, the study’s authors found. For example: Two years after a hospital buys an OB-GYN practice, prices for labor and delivery jump an average of $475 and physician prices rise by $502, according to the study. Researchers focused on births, which are the most common reason for hospital admission among people with private insurance.
Impact on the Healthcare Industry
This rapid acquisition by hospitals is reshaping a U.S. industry once dominated by tens of thousands of small, physician-owned practices. Only about 42% of U.S. physicians work in a physician-owned private practice, according to the most recent survey data from the American Medical Association. Nearly 47% work for hospitals, a sharp rise over the past several years. Most emergency room physicians are now employed by hospital systems or by private equity-owned staffing groups.
Anticompetitive Price Increases
The new research offers further evidence for how hospital acquisitions of private practices “can result in anticompetitive price increases,” said Matthew Grennan, one of the study’s authors and an associate professor of economics at Emory University, in a news release. “As a result, I think economists and others in the antitrust community are likely to give more careful consideration to these potential sources of harm,” he said.
Medical Debt and Regulation
Medical debt is a leading cause of bankruptcy in the United States, with about 14 million Americans owing more than $1,000 in medical debt, according to research nonprofit KFF. These post-merger price increases are driven by reduced competition, Grennan and his fellow researchers found. Yet there’s been little effort by federal or state regulators to halt hospital mergers that could lead to higher prices for consumers.
State Efforts to Lower Medical Costs
But states have taken some steps toward lowering medical costs in recent years. Bipartisan groups of lawmakers in more than a dozen states have addressed so-called “facility fees,” which are charges that some hospitals tack on for patient visits to hospital-owned physician offices. This year in Oklahoma, Republican lawmakers passed a bill requiring hospitals to make the cost of many of their services more transparent to patients so they’re aware of the costs. Providers can face penalties for noncompliance.
Pricing Transparency and Caps
Some states have capped the rates hospitals or physicians can charge. Colorado sets provider and hospitals rates based on a specific formula if insurance plans aren’t able to lower peoples’ premiums to a certain level, while Montana and Oregon limited the amount hospitals and other providers can charge for their state employee health plan.
Conclusion
The acquisition of private physician practices by hospitals has led to increased costs for patients and insurers. As the healthcare industry continues to evolve, it is essential for regulators and lawmakers to take steps to address anticompetitive price increases and promote transparency in medical billing. By doing so, they can help reduce the burden of medical debt on Americans and ensure that healthcare remains accessible and affordable.
FAQs
Q: What has happened to the share of physicians working for hospitals in the United States?
A: The share of physicians working for hospitals has nearly doubled since the early 2000s.
Q: How do hospital acquisitions of private practices affect prices?
A: Hospital acquisitions of private practices can lead to anticompetitive price increases, with prices for labor and delivery jumping an average of $475 and physician prices rising by $502 two years after a hospital buys an OB-GYN practice.
Q: What steps have states taken to lower medical costs?
A: States have addressed facility fees, required hospitals to make their costs more transparent, and capped the rates hospitals or physicians can charge.
Q: How many Americans owe more than $1,000 in medical debt?
A: About 14 million Americans owe more than $1,000 in medical debt.
Q: What can be done to reduce the burden of medical debt on Americans?
A: Regulators and lawmakers can take steps to address anticompetitive price increases, promote transparency in medical billing, and ensure that healthcare remains accessible and affordable.
