Same Doctor Visit, Double the Cost

According to the Wall Street Journal, the acquisitions of private physician practices by hospitals are sending healthcare procedural rates through the roof. The report cites insurers that say these hikes (one example is a routine echocardiogram jumping from $373 to $1,605) are sure to become routine as this trend continues.

Here’s an excerpt from the article:

“Major health insurers say a growing number of rate increases are tied to physician-practice acquisitions. The elevated prices also affect employers, many of which pay for their workers' coverage. A federal watchdog agency said doctor tie-ups are likely resulting in higher Medicare spending as well, because the program pays more for some services performed in a hospital facility.”

Our Perspective: The report says hospitals have explained that higher reimbursement is needed in some cases because it costs more to operate outpatient clinics, which must meet strict regulatory requirements and often treat patients who lack insurance. Long term, however, they expect the acquisition of physician practices to improve care, integrate services, and reduce waste, efforts that are encouraged by Affordable Care Act.

Our research shows that common medical procedures already cost employer-sponsored insurance as much as $36 billion a year, with some markets carrying prices two-to-three times the cost of the median price for the same procedure.  But with estimates of the amount of healthcare waste in the country creeping up on $1 trillion, the healthcare industry is in need of a solution. It’s an intriguing trend to keep an eye on.