Bloomberg: Consumers Pay the Price of Provider Consolidation

A Bloomberg article looks at an issue we’ve written about before – how provider consolidation increases health care costs.

Highlights from the article:

  • “Under Medicare’s tangled payment system, hospitals get higher reimbursements than individual doctors for cardiology treatment, as they do for other specialty services, in some cases as much as three times more. At the same time, the added bargaining power gained by controlling more of the heart care in a geographic market has given large hospital systems added leverage in negotiating reimbursements from insurers…”
  • “‘Clearly, in the short run, it raises costs,’ said Paul Ginsberg, president of the Center for Studying Health System Change, a Washington-based nonprofit research group. ‘We have a case where a physician becomes employed by a hospital and now a payer, like Medicare, has to start paying more.’”
  • “In Wisconsin, the number of heart doctors in private practice has declined to 11 percent from 62 percent of cardiologists in 2007, according to the American College of Cardiology, whose main offices are in Washington. The trend is similar nationwide. The number of heart doctors working for U.S. hospitals has more than tripled, while the number in private practice has fallen 23 percent over five years, the ACC said.”
  • “Medicare, the U.S. government’s health program for the elderly and disabled, pays a hospital $400 for an echocardiogram, $180 for a cardiac stress test and more than $25 for an electrocardiogram, according to data from the American College of Cardiology. At a private physicians office, Medicare pays $150 for an echocardiogram, about $60 for a cardiac stress test and $10 for an electrocardiogram.”
  • “Those payments to doctors in private practice have been slashed over the past five years, a main force pushing doctors to hospitals. Jay Alexander, a cardiologist who co-owned a practice in Lake County, Illinois, said his Medicare revenue dropped 35 percent over two years causing him to fire workers, cut salaries and borrow money to stay open. The revenue loss drove him to sell his practice to a local hospital in 2010.”
  • “The cuts he faced, though, didn’t apply to hospitals, which saw Medicare reimbursements rise over the same period under a different set of government formulas, according to ACC. After selling his practice to a hospital in 2010, Medicare now pays Alexander three times as much for doing the same tests and procedures he did in private practice.”

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