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Prices Are Higher When Hospitals Buy Doctors’ Practices. That’s Set to Change

Aimee Sharp
Author | Shield HealthCare
10/30/15  12:15 PM PST
Hospitals Buy Doctors’ Practices


In the last few years, there has been something of an acquisition boom in doctors’ practices, as hospitals have been snapping them up.

Congress may have just cut a deal to slow down all that deal making. As part of the big budget agreement between the White House and congressional leaders, lawmakers want to take away a big incentive driving those mergers: the higher prices that doctors’ offices could charge Medicare when they were owned by a hospital.

The way it works now, an orthopedist who sets a bone in a private practice office is paid less than that same orthopedist in that same office if it is owned by a hospital. That difference can lead to bigger costs for the federal government — and for seniors, who have to pay a portion of the cost of their medical visits.

Hospitals argue that their higher payments rightly reflect their higher costs of providing care: They are bound by more requirements, tend to see sicker patients and have to subsidize costly services, like emergency rooms, that independent doctors do not. Nevertheless, the price differences have been criticized by the Medicare Payment Advisory Commission (MedPAC), which suggests improvements to Congress, and by the Obama administration, which has sought to equalize the prices in its budget.

The critics say that paying higher prices just because of who owns a practice drives up health care costs and distorts business incentives.Studies show that the mergers can also drive up costs for privately insured patients.

I wrote about this difference — and the push to eliminate it — earlier this year.

Read the Full Article at The New York Times.