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By Paul J. Schilling, MD, FACRO
Community Cancer Center of North Florida
Gainesville, Florida
Hospital acquisition of physician practices is at an all time high:
Nearly 40% of primary care physicians working in hospitals as employees.
25% of specialists are employed by hospitals.
Acquiring physician practices can drive up the costs of medical care by giving more price negotiating power to hospitals, the stated conclusion of a 2010 study published in the Journal of Health Affairs. According to the authors, consolidation of power among hospitals led to higher reimbursement for hospital negotiating in areas where they have a large bloc of outpatient practices.
One area of reimbursement, often poorly understood by physicians, is the increase in primary care payment under Medicare Part A (hospital reimbursement) compared to Medicare part B (physician reimbursement). When a hospital purchases a primary care practice, they can designate it as a "Senior Center" or an "Urgent Care Center". This leads to increased reimbursement for the same services. As such, reimbursement for an office visit may increase two to three fold due to a "facility fee" that is paid under Medicare Part A, but not part B. This is in addition to the physician fee. The result is higher hospital (Part A) reimbursement for the same level of service.
Consolidation of outpatient practices, with increased pricing ability has not escaped the notice of the California Attorney General who is investigating increased pricing power of five large hospitals systems. Their office is concerned that anti-trust statutes may have been violated, resulting in an increased cost for medical care.
As primary care physician practices are besieged by low reimbursement and increasing overhead, hospital acquisition seems like the "way out". Hospital acquisition is also the "way in" to higher pay for primary care physicians as well as hospitals.
For non hospital based Radiation Oncologists, this may mean fewer patients. Hospital systems who have radiation oncology units and purchase primary care practices seem to have an uncanny ability to steer patients to hospital owned radiation oncology units, even where this practice is explicitly illegal. The increase in patient volume for hospital outpatient centers may embolden hospitals to end contracts with well established hospital based radiation oncologists.
To change this, we must support reimbursement parity between Medicare Part A and Medicare part B - the same reimbursement from both parts of Medicare for the same service.
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