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What Happens When Hospitals Buy Up Physicians?

By Kyle Marshall | May 19, 2014 | Healthy Lifestyle, Industry Perspectives

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If you’re searching for evidence that health care consolidation drives up health care costs, look no farther than this month’s issue of the journal Health Affairs.

Researchers at Stanford University examined what happens to rates for hospital services following hospital acquisitions of physician practices. Perhaps not surprisingly, hospital ownership of practices was associated with higher hospital prices. And that translated into patients and insurers paying more than they otherwise would.

There’s a good summary of the study in Kaiser Health News.

Taking a Closer Look

Anything that potentially drives up what you pay for health care gets our attention. That’s why health care consolidation is a topic we discuss in our Let’s Talk Cost campaign.

The consolidation trend — whether it’s health care systems acquiring physician practices or taking over other hospitals — also has the attention of the federal government. The Federal Trade Commission recently rejected hospital acquisitions in Ohio and Idaho, citing the threat of anticompetitive behavior and rising costs.

Does Consolidation Help Coordinate Care?

Like so much of health care, there are multiple sides to take into account. In fact, there are potential benefits to consolidation as hospitals and doctors work together to coordinate patient care.

Many health industry experts believe that recent measures like accountable care organizations and flat-fee, or bundled, payment arrangements will help stem rising costs. These are the very types of arrangements that occur most frequently in large, integrated health systems where hospitals and physicians work in a coordinated fashion.

At BCBSNC we’ve embarked on numerous ACO and bundled-payment arrangements with health care systems across the state.

We want to hear what you have to say about health care consolidation. Go to our Facebook page, tweet us with the hashtag #letstalkcost or leave a comment below.