Profit disparity between hospitals, independent practices has 'catastrophic implications' — 3 thoughts from Dr. Mara Holton

Independent practices retained 9 percent of profits from physician-administered medicines, with hospitals retaining the other 91 percent, according to the Partnership for Health Analytic Research's new Hospital Margin Analysis Report.

Mara Holton, MD, discussed the findings with Becker's ASC Review. Dr. Holton is an independent physician and vice chair of the health policy committee for LUGPA, the Large Urology Group Practice Association.

Note: Responses were lightly edited for style and clarity.

Question: In your opinion, what's the most significant finding from the Partnership for Health Analytic Research's new Hospital Margin Analysis Report?

Dr. Mara Holton: It is well established that hospitals have a monopoly in the industry and receive massive benefits not afforded to independent practices. This is layered upon the background of an increasingly complex healthcare landscape, the proliferation of regulatory requirements and obligations, and increasing costs to comply and maneuver thereby. While these are paramount issues in and of themselves, the report's finding that hospitals are retaining such excessive profit from the administration of medications — exceeding that of the manufacturers who produce the drugs in some cases — highlights just how perverse these arrangements have become. It reinforces the case that independent physicians have made for years: that hospitals have a colossal, unfair market advantage within healthcare. In an industry such as healthcare, which inevitably touches each of us and can have profound implications on millions of people's ability to thrive and participate fully, this imbalance tips the scales dangerously. While it may sound alarmist to some, research and evidence supports the contention that poor or absent competition in healthcare translates to lower-quality and higher-cost care, inevitably resulting in poorer patient outcomes. Unfortunately, should we fail to address the institutional and statutory limits on competition and innovation, these trends could have catastrophic implications.

Q: Why do you think independent practices retained such a small percentage of profits from physician-administered medicines compared to hospitals?

MH: To state this plainly and simply, hospitals and their powerful lobbying apparatus monopolize the healthcare market and control much of the political discourse. From Stark Law to the recent federal overturn of site-neutral payment reform, hospitals have an enormous leg up on independent practices and other healthcare providers legislatively. This results in a healthcare market that increasingly lacks competition. Furthermore, with the proliferation of hospital consolidation, often partially funded by these disproportionate benefits, hospitals are swallowing up independent practices and further eliminating competition. Thus, we see larger and larger hospital systems with greater size, influence and profits and the corresponding extinction of competitive alternatives in the independent setting. The reduction in competition and unparalleled negotiating advantage with insurers ultimately drives up costs for consumers and stagnates innovation and access.

Q: What should independent practices do with this information? How can they collect a larger share of gross profits for physician-administered medicines?

MH: From this analysis, independent physicians can objectively point to metrics that quantify the existing profit disparity between hospitals and independent practices. This emphasizes that the current landscape of the healthcare industry is actually structured to impede competition and precludes fair and equal compensation for equivalent care. In order to address that discrepancy, independent practices must work relentlessly to educate legislators and the public about our integral role within the healthcare system, and to provide direction for remediation and positive change. In our system, this can only be achieved by the consolidated efforts of independent providers working in tandem to ensure that our perspective and challenges are represented to the same degree as those of the powerful hospital lobby.

While there are many avenues through which independent practices can become advocates for fair pay and equal reimbursement, one proven alternative is to join an independent physician association, such as LUGPA, that is dedicated to advancing key policy priorities for independent urologists and physicians in general. In this way, independent physicians can connect and amplify their allied voices to match those of the hospitals and hospital systems, thereby garnering Congress' attention and accelerating meaningful change.

Want to participate in future Q&As? Email Angie Stewart: astewart@beckershealthcare.com.

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