Hospital-Employed Physicians: Same Doctor Visit, Double the Cost

Hospitals are acquiring physician practices and integrating them into hospital services. The stated goal is to improve care coordination, eliminate duplication of services and boost efficiency. However, Medicare and private insurers pay more for hospital services than the same service if done outside the hospital, such as in a doctor’s office. According to the Wall Street Journal (gated):

After David Hubbard underwent a routine echocardiogram at his cardiologist’s office last year, he was surprised to learn that the heart scan cost his insurer $1,605. That was more than four times the $373 it paid when the 61-year old optometrist from Reno, Nev., had the same procedure at the same office just six months earlier.

Comments (10)

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  1. Bruce says:

    You mean ObamaCare is going to increase health care costs?

  2. Devon Herrick says:

    Hospitals are buying physician practices and paying a huge premium in the process. I know of doctors who are getting $100,000 apiece for letting hospitals take over the hassle of administering a practice that (on paper) should not generate excess profit after paying physicians for their labor. Many health care experts explained this trend was in anticipation of Accountable Care Organizations, when Medicare will begin paying bundled fees for services. However, bundled fees are a few years off. It appears hospitals have other motives. Baby Boomer physicians are nearing retirement and many would welcome the chance to slow down and work fewer hours. Younger physicians aren’t willing to work 60 hours a week and aren’t necessarily enthralled with the idea of running their own business. Hospitals see an opportunity to employ doctors (locking in their referrals) while billing Medicare for hospital outpatient services at higher rates than would ordinarily paid to physicians. It’s a loophole; and it’s a great example of how health care providers game the system and try to maximize against reimbursement formulas.

  3. Kyle says:

    Once again, price increases that boggle the mind. Yet we keep saddling the healthcare industry with substandard gov. reimbursement.

  4. Dr. Steve says:

    Once hospitals have the majority of doctors as salaried positions (not to far off) they will have closed staffs. Those on the outside wont be able to get privileges, and make a good living, and those on the inside will be subjected to lower compensation and longer hours. Just the thing these docs thought they were going to avoid. Major cities will have maybe two or three hospital systems. Rural areas will be lucky to have a hospital. They will have Mega-hospital affiliated clinics with nurse practitioners, robot docs connected to the mega by the internet, and maybe a sympathetic doctor hologram.
    And cost/price in this restricted market will be less competitive.
    Folks, it is not going be pretty.

  5. Eric says:

    So you are saying maybe Medicare could reduce reimbursements to providers without harming patients?

  6. Robert says:

    It appears hospitals have other motives.

    Major cities will have maybe two or three hospital systems.

    The sounds like the beginning of a healthcare oligopoly, and I do not see it being good for the consumer. Let’s not forget that many hospital systems are already national systems, such as Hospital Corporation of America, which owns all of the following in the North Texas area: Green Oaks, Medical City Dallas, Medical Center of Plano, Las Colinas Medical Center, Medical Center of McKinney, Medical Centr of Lewisville, North Hills, Denton Regional, Plaza Medical, Medical Center of Arlington, Medical City Children’s. If private practices start to get assimilated into this system, I can’t see very much variation in pricing or incentive for competition.

  7. Robert says:

    I would say the other major player in the area is Texas Health Resources which owns all the Harris and Presbyterian hospitals:

  8. Anton says:

    I’m with Devon on this.

    “It’s a loophole; and it’s a great example of how health care providers game the system and try to maximize against reimbursement formulas.”

    I see doctors outside hospital networks providing care only to those with private insurance or in the cash market. Medicare patients will be pushed into hospitals with effects to be seen.

  9. Bob Hertz says:

    I have been concerned about the price-gouging through these ‘facility fees’ for a long time.

    Question of the day is this:

    Why are insurance companies so dumb?

    Why not set the reimbursement at $373 in the procedure describes above, and force the hospital to provide a binding quote to the patient before they pay anything?

    The patient gets a printout of who is charging what.

    If the patient chooses the high priced hospital, the patient pays the difference.

    If the patient is steered toward the hospital without his knowledge, and could have paid less, he refuses to pay the difference and the courts back him up.

    (this happened to me last year. A $45 blood test was jacked up to $160 with a facility fee. I did not find out about it until after the care was done, so after writing three angry letters I gave up and paid the bill.)

    Medicare could do consumer choice too, in theory, althogh hospital lobbyists will get in the way for years if we let them.

    Aetna is doing a consumer choice program like this in a few markets.

    What is holding back other insurers? I suppose they have contracts with hospitals that cannot be changed rapidly.


  10. August says:

    I think a problem here would be “the patient pays the difference”. Mobility and access to the low priced care are difficult to account for and could hurt the consumer.

    But I take the point: transparency is good. I’ve read that some companies are offering cash incentives to influence patient’s choices.