Why Hospital Owned Physicians Will Drive Up the Cost of Healthcare

As most Americans are aware and many have already experienced first hand, the United States healthcare system has been undergoing major transformations. Not only has insurance coverage become more complicated, but also you may have noticed that your once private practice doctor now has their office within a large hospital system.

Why are physicians joining hospital systems versus staying in their independent office?

Many older physicians are selling their practices and working for hospitals or large health centers for several reasons. One of the primary reasons is that there are more resources available to them. For example, it is much easier to send a patient to get an MRI within the same building that they just had their appointment in rather than sending them to a satellite MRI office. It is easier for the patient too.

Joining a large mega healthcare group also provides constant stream of patients and job security. For younger physicians, looking to buy a practice can be a large financial burden. It is expensive to buy the office and equipment, but then to also employ staff.  Overall, there is decreased cost to the physician when a physician is employed by a hospital rather than paying to keep their private practice running.

Why is it beneficial for hospitals to buy private practices and then also pay the physicians’ salaries?

The main advantage for hospitals is more patients using the hospital facilities and imaging. Hospitals have tried this model in the past of buying up practices; however, at the time, it was not financially successful for hospitals. It is believed now that hospitals will make profit off of the mega healthcare groups due to the way that healthcare and insurance is setup.  It also is good for hospital reputation to have all specialties represented within the hospital.

Are having all specialties within in one hospital really a good idea?

One of the major cons includes cost.  You may notice that the price of your healthcare has increased and you may notice extra fees that you never had when you saw the physician in the private office. Unfortunately, one study that was released October 2014 showed a 10% increase in cost for patients to see a hospital employed physician versus private physician. As an example, the reimbursement for an X-ray in my office is about $36, while the same X-ray performed in a hospital setting is $300-600.  Surgery done at a hospital is approximately twice the amount as having it done at an ambulatory surgery center.  The cost of MRI’s and CT scans are another example where the hospital cost is significantly higher than a free standing facility. These are examples of why hospital owned physician groups and hospitals will drive up the cost of healthcare.  This cost is passed onto you, the patient.  Another frustration with major hospital systems is more difficulty with getting an appointment due to higher patient loads. Once you enter a major hospital system for your care, it can be easier to get lost within the hospital system and you may feel more like a number compared to when you saw the private physician in the office. With time, we will learn if these pros outweigh the cons.

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