State AGs say purchase of medical practices drives up prices

The much contested St. Luke's Health System-Saltzer Medical Group acquisition--often considered to be a local matter confined to mostly rural Idaho--actually has national implications, according to amicus briefs filed by 16 state attorneys general.

Those AGs, according to MedScape, contended that hospital purchases of medical practices do little more than drive up prices for patients without actually improving the quality of care delivered. The opinions were delivered by the attorneys general of California, Illinois, Pennsylvania and other prominent states.

And their opinions are essentially in lockstep. They have all declared that merging medical practices and hospitals gives them an upper hand when negotiating with insurers. They are also more likely to impose higher facility fees on patients and are less likely to make referrals to other hospitals. "These developments have all led to higher prices for insurers, resulting in consumers paying higher premiums, deductibles and co-pays," MedScape reported. Moreover, patients are not willing to travel distances in order to seek better prices. And if they have insurance, their out-of-pocket costs, even if substantial, are still a fraction of the cost of the care delivered.

The purchase of specialty medical practices has caught federal regulators' attention, particularly after the cost of oncology and other specialty services seemed to rise shortly after such deals were consummated.

The St. Luke's-Seltzer deal was found to violate federal antitrust laws, although the court allowed the deal to continue in the guise of a formal partnership while the case goes hrough the appellate process.

That is not to say that the combining of physician practices and hospitals can't be performed in a better way. The AGs have said electronic medical records can be shared between the constituents without merging, as can improved coordination of care and the joint implementation of best medical practices.

To learn more:
- read the Medscape article