ACPE poll: Hospital costs increase after physician practice acquisitions

Despite the common belief that acquiring physician practices will result in savings, a recent poll conducted by the American College of Physician Executives (ACPE) revealed costs actually increased after a hospital or health system bought a medical group or practice.

According to the ACPE poll, 32 percent of the 459 respondents said costs went up after a physician practice acquisition. Sixteen percent indicated costs remained the same and only 5 percent said costs decreased. The remaining respondents either said they weren't sure (12 percent) or the situation wasn't applicable (35 percent).

The ACPE findings were echoed in a recent Medicare Payment Advisory Commission report that shows the same clinical services cost more when performed as an outpatient procedure at a hospital instead of a doctor's office, according to the announcement.

But several participants said the cost increase is temporary and will change once healthcare switches from a volume-based reimbursement model to one focused on value and quality of care. "Once the payment mechanism is turned around to measuring outcomes and payment is not based on doing more equals earning more, then the answer you get might be different," said Kathryn Stewart, M.D., in the announcement.

The Healthcare Financial Management Association reported similar findings in a recent survey that showed most hospital CFOs don't expect physician employment will result in a positive return on investment in the early years of such an agreement. Instead, CFOs believe hospital-employed physicians will mostly create benefits in the realms of improved care coordination, patient referrals and market share. And incentives will be based less on volume and productivity but more in improving quality and costs.

To learn more: 
- here's the ACPE announcement
- read the MedPAC report (.pdf)

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