Doctor’s Tip: Hospitals acquiring medical practices: good or bad?
The answer to this question is not simple or black-and-white. In her book “American Sickness,” Elizabeth Rosenthal, M.D. talks about “the transformation of American medicine in a little over a quarter century from a caring endeavor to the most profitable industry in the United States.” Those who have lived in this area for a long time have witnessed this change in our valley. When I joined Glenwood Medical in 1973, Valley View Hospital was run by the Mennonite Board of Missions, had maybe 25 beds, and I was the 12th doctor on the medical staff. The doctors’ wives helped cook the Christmas dinner for the hospital staff. There was a close relationship between physicians and the hospital, but physician practices were independent of the hospital.
Part of the business plans of hospitals throughout the country now includes buying up physician practices. The majority of physicians in Glenwood work for VVH, and in Rifle most work for Grand River Hospital. On the positive side, the phenomenon of hospitals hiring physicians allows physicians to do what they like to do and what they do best — treat patients, without worrying about administrative duties. It also enables physicians who are struggling financially to stay in town, and provides them with benefits such as retirement plans and health care insurance.
However, there can be downsides to hospital-owned medical practices:
• At least for primary care doctors, there is built-in conflict of interest: Hospitals take care of sick people, and the job of PCPs is to keep their patients well and out of hospitals.
• Almost always, lab and imaging studies in hospitals are more expensive than in free-standing facilities. Some (but not all) hospitals pressure their hired physicians to order lab and imaging from the hospital, which raises costs.
• Some hospitals pressure their physician employees to refer patients to other physicians who work at that hospital, even though an outside consultant might be preferable.
• Sometimes hospitals retain specialists such as orthopedists or neurosurgeons if they generate a lot of income for the hospital, even if they’re incompetent or have other problems that affect their practice.
• Rates for procedures such as upper endoscopies, colonoscopies, and many routine operations are almost always lower in free-standing outpatient facilities. Hospital-owned surgical providers often can’t take advantage of this less-expensive alternative.
• There are anti-trust legal concerns with doctor-hospital mergers.
Martin Gaynor, a health care economist at Carnegie Mellon University, says that “all the evidence that we have so far…indicated that these acquisitions tend to drive up prices, and there’s other evidence that seems to indicate it doesn’t do anything in terms of enhancing quality.” A study of Medicare patients showed that the scenario of hospitals buying up physician practices “caused … health care services to rise $3.1 billion between 2012 and 2015, with beneficiaries facing $411 million more in financial responsibility for these services than they would have if they were performed in independent physicians’ offices.”
Retired physician Greg Feinsinger, M.D., is author of new book “Enjoy Optimal Health, 98 Health Tips From a Family Doctor,” available on Amazon and in local bookstores. Profits go towards an endowment to the University of Colorado School of Medicine to add prevention and nutrition to the curriculum. He is available for free consultations about heart attack prevention, diabetes reversal, nutrition, and other health issues. Call 379-5718 for an appointment. For questions about his column, email firstname.lastname@example.org.
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