Physician practices are selling to hospitals and corporate entities at an accelerated rate during the COVID-19 pandemic.
But what happens to healthcare when there is increased consolidation and less competition? Several studies over the past decade have examined these trends. Six notes:
1. The cost of care increases. The most concentrated healthcare markets where physicians are part of health systems charge fees 14 percent to 30 percent higher than in the least concentrated markets, according to a study published in The Journal of Law & Economics. Physician costs in highly concentrated markets were also higher than physicians practicing in the least concentrated markets.
2. The price of health insurance increases. In California, premium prices were up 12 percent in markets where there was a higher share of physicians employed by hospitals, according to a study in Health Affairs. Hospitals that don't have competitors within 15 miles charge on average 12 percent more than hospitals with four or more competitors, according to data from the National Bureau of Economic Research.
3. Outpatient services prices increase when hospitals acquire physician practices, according to a study published in JAMA Internal Medicine. Hospital outpatient departments are also able to charge Medicare more for the same services as ASCs, although patient deductible is lower for some services.
4. The quality of care suffers. Medicare beneficiaries are more likely to choose high-cost, low-quality hospital care when physicians are employed at the hospital, according to a study in the Journal of Health Economics.
5. Patients are less satisfied. A study published in Health Services Research found patients were more satisfied in markets with less hospital consolidation.
6. Physician income drops. Independent physicians earn an average of 0.8 percent more than physicians in hospital-owned practices, according to an article in Health Affairs. The study also found a $2,987 drop in income for physicians overall after their practice is acquired. Medscape also reports independent physicians earn more than employed physicians and specialists, including orthopedic surgeons. The independent orthopedists made $29,000 more than employed orthopedists in 2021.