At the Intersection of Health, Health Care and Policy Cite this article as: Thomas A. Thomas Independent Physicians' Practices And Consolidation Health Affairs, 33, no.9 (2014):1702 doi: 10.1377/hlthaff.2014.0812
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Health Affairs is published monthly by Project HOPE at 7500 Old Georgetown Road, Suite 600, Bethesda, MD 20814-6133. Copyright © 2014 by Project HOPE - The People-to-People Health Foundation. As provided by United States copyright law (Title 17, U.S. Code), no part of Health Affairs may be reproduced, displayed, or transmitted in any form or by any means, electronic or mechanical, including photocopying or by information storage or retrieval systems, without prior written permission from the Publisher. All rights reserved.
Not for commercial use or unauthorized distribution Downloaded from content.healthaffairs.org by Health Affairs on September 9, 2014 at NORTHERN ILLINOIS UNIV
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doi:
10.1377/hlthaff.2014.0812
Independent Physicians’ Practices And Consolidation The June issue of Health Affairs focused heavily on health system consolidation and its relationship to opportunities or failures in the marketplace. Surprisingly, the articles in the issue failed to accurately present the role that consolidation plays regarding independent physicians’ practices and how the survival of these practices can help provide the same services less expensively than with consolidation. In concentrated markets after mergers or acquisitions of independent medical practices, prices can increase by up to 40 percent. 1 This can create an anticompetitive market that favors consolidated hospital systems, leaving independent facilities with minimal leverage to negotiate reasonable reimbursement rates. Thus, patients are likely to pay more for a given procedure in a large health care system than they would in an independent setting. Furthermore, patients’ choice of providers is limited. The 2014 annual report of the Medicare Payment Advisory Commission (MedPAC) disclosed that Medicare
170 2
Health A ffairs
rates were 81 percent higher in hospital outpatient departments than in ambulatory surgery centers.2 Efforts should focus on eliminating the unfair market conditions created by consolidation. MedPAC has acknowledged that higher prices in hospital outpatient departments do not reflect better patient care and result in higher Medicare spending. MedPAC has recommended a “site neutral” payment policy with respect to sixtysix groups of services provided in hospital outpatient departments. 2(p280) MedPAC estimates that reducing the departments’ payment rates for these services would save Medicare $1.1 billion in the reductions’ first year. 2 Thomas A. Thomas Association of Independent Doctors WINTER PARK , FLORIDA NOTES 1 Gaynor M, Town R. The impact of hospital consolidation—update [Internet]. Princeton (NJ): Robert Wood Johnson Foundation; 2012 Jun [cited 2014 Jun 17]. (Policy Brief No. 9). Available from: http://www.rwjf.org/content/dam/farm/ reports/issue_briefs/2012/rwjf73261 2 Medicare Payment Advisory Commission. Report to the Congress: Medicare payment policy [Internet]. Washington (DC): MedPAC; 2014 Mar [cited 2014 Jun 18]. Available from: http: //medpac.gov/documents/Mar14_Entire Report.pdf
September 2014
33:9
Downloaded from content.healthaffairs.org by Health Affairs on September 9, 2014 at NORTHERN ILLINOIS UNIV
The online version of this article, along with updated information and services, is available at: http://content.healthaffairs.org/content/33/9/1702.2.full.html
For Reprints, Links & Permissions: http://healthaffairs.org/1340_reprints.php E-mail Alerts : http://content.healthaffairs.org/subscriptions/etoc.dtl To Subscribe: http://content.healthaffairs.org/subscriptions/online.shtml
Health Affairs is published monthly by Project HOPE at 7500 Old Georgetown Road, Suite 600, Bethesda, MD 20814-6133. Copyright © 2014 by Project HOPE - The People-to-People Health Foundation. As provided by United States copyright law (Title 17, U.S. Code), no part of Health Affairs may be reproduced, displayed, or transmitted in any form or by any means, electronic or mechanical, including photocopying or by information storage or retrieval systems, without prior written permission from the Publisher. All rights reserved.
Not for commercial use or unauthorized distribution Downloaded from content.healthaffairs.org by Health Affairs on September 9, 2014 at NORTHERN ILLINOIS UNIV
Letters There is a limit of 300 words for letters to the editor. Health Affairs reserves the right to edit all letters for clarity, length, and tone. Letters can be submitted by e-mail, [email protected], or the Health Affairs website, http:// www.healthaffairs.org.
doi:
10.1377/hlthaff.2014.0812
Independent Physicians’ Practices And Consolidation The June issue of Health Affairs focused heavily on health system consolidation and its relationship to opportunities or failures in the marketplace. Surprisingly, the articles in the issue failed to accurately present the role that consolidation plays regarding independent physicians’ practices and how the survival of these practices can help provide the same services less expensively than with consolidation. In concentrated markets after mergers or acquisitions of independent medical practices, prices can increase by up to 40 percent. 1 This can create an anticompetitive market that favors consolidated hospital systems, leaving independent facilities with minimal leverage to negotiate reasonable reimbursement rates. Thus, patients are likely to pay more for a given procedure in a large health care system than they would in an independent setting. Furthermore, patients’ choice of providers is limited. The 2014 annual report of the Medicare Payment Advisory Commission (MedPAC) disclosed that Medicare
170 2
Health A ffairs
rates were 81 percent higher in hospital outpatient departments than in ambulatory surgery centers.2 Efforts should focus on eliminating the unfair market conditions created by consolidation. MedPAC has acknowledged that higher prices in hospital outpatient departments do not reflect better patient care and result in higher Medicare spending. MedPAC has recommended a “site neutral” payment policy with respect to sixtysix groups of services provided in hospital outpatient departments. 2(p280) MedPAC estimates that reducing the departments’ payment rates for these services would save Medicare $1.1 billion in the reductions’ first year. 2 Thomas A. Thomas Association of Independent Doctors WINTER PARK , FLORIDA NOTES 1 Gaynor M, Town R. The impact of hospital consolidation—update [Internet]. Princeton (NJ): Robert Wood Johnson Foundation; 2012 Jun [cited 2014 Jun 17]. (Policy Brief No. 9). Available from: http://www.rwjf.org/content/dam/farm/ reports/issue_briefs/2012/rwjf73261 2 Medicare Payment Advisory Commission. Report to the Congress: Medicare payment policy [Internet]. Washington (DC): MedPAC; 2014 Mar [cited 2014 Jun 18]. Available from: http: //medpac.gov/documents/Mar14_Entire Report.pdf
September 2014
33:9
Downloaded from content.healthaffairs.org by Health Affairs on September 9, 2014 at NORTHERN ILLINOIS UNIV
