Take physician groups. The death of the independent physician practice, working solo or in a small practice, has long been predicted (and nostalgically lamented). Honestly: would you rather be treated by a doctor practicing alone, or by one at the Mayo Clinic? Physician groups allow for things like development of best practices, administrative efficiencies, and, in this era of Big Data, larger data sets that can be used to improve patient care. When it comes to physician groups, bigger would seem to be better.
If physician groups are good, the theory goes, then integrating them clinically and financially with hospitals, such as through partnerships or common ownership, should even better. That allows for more aligned incentives and better coordination across the continuum of care. Everyone loves Kaiser-Permanente, right?
The AMA says solo practice physicians now are only 17% of all physicians, down from 40% in 1983, and that physician ownership of their practice has declined from 76% in 1983 to just over 50% now (although other surveys say as few as 35% of physicians described themselves as independent practice owners, down from 62% as recently as 2008). Our health care system, it would seem, is destined to be made up of large physician groups, many of which will be owned by hospitals.
Too bad both larger groups and hospital ownership apparently end up costing us more.
A new study in Health Affairs found that as physicians concentrate in larger groups, prices tend to go up, at least for the 15 high volume, high cost procedures the authors looked at. Twelve of the 15 procedures had prices that were 8 to 26 percent higher in areas with the highest physician concentrations; they found no significant relationship for the remaining three.
It might seem that whatever savings might be gained by becoming part of a group are not being passed on to consumers (or their health plans), and/or larger size allows groups to bargain for better reimbursement rates from payors.
An earlier survey, by one of the lead authors of the new study, found that more competition among physicians did, in fact, result in lower prices, at least for office visits. One might conclude that more concentration into larger physician practices may have less to do with greater efficiency or higher quality than it does with reducing competition.
The moral appears to be, if you don't want to compete with them, join them!
Then there is the hospital ownership effect. A study in JAMA Internal Medicine found that increased hospital/physician financial integration led to greater spending, primarily in outpatient care and almost entirely due to higher prices, not higher utilization. Again, the price increases are attributed to greater bargaining power. As one of the authors told The Wall Street Journal: "The market power that is in the hospital’s hands is conferred to the physician practice."
The AHA protests that the study "is not reflective of the changes happening in today’s health-care market," citing newer value-based payment arrangements and hospital price increases that are at historically low levels. That's kind of like saying, well, we weren't taking advantage of you before, but -- trust us -- in the future we really won't take advantage of you.
One visible impact of hospital ownership on physicians is the infamous facility fee add-on. You've been going to the same doctor for years, then the practice gets bought by a hospital, and the next time you go your bill suddenly has this "facility fee" added onto it. Same services, same office, same doctor -- but more expensive.
A good example of this practice is in Pittsburgh, where Highmark unilaterally decided to stop paying such fees for chemotherapy done at UPMC-owned oncologists' offices. Highmark says the fees are "irrational." UPMC says they are not only necessary but standard practice, including at Highmark's own hospital system, Allegheny Health. The matter is in court.
These kinds of fees, based on "place of service," are expressly permitted by Medicare, although one has to assume that they were not the intent of those rules. Of course the AHA defends them, saying that hospital-owned practices can bill as an outpatient facility because they are subject to the more onerous requirements that other hospital outpatient services are, but they just don't pass the sniff test. That's not supposed to be why we're doing integrated delivery systems.
Maybe the AHA is right. Maybe once we move more fully into the wonderland of value-based payment arrangements everything will work out: better quality for same or lower costs. The American Medical Group Association (AMGA), the long-time trade association for physician groups, similarly says that their vision is:
"Dramatically improved population health and care for patients at lower overall costs will be achieved by high-performing and clinically integrated medical groups and health systems."They've got all the right buzzwords (except they missed "value-based"), but AMGA has been around for 65 years, so where is that "dramatically improved" health and where are those lower costs?
I've lived through DRGs, RBRVS, capitation, global capitation, staff model HMOs, IPAs, and an array of cost/quality incentive programs -- each of which was supposed to be the next magic bullet -- so I'm not holding my breath that payors will finally be able to outsmart providers when it comes to controlling revenue.
Don't get me wrong: I've long been a believer both in large physician groups and in clinical integration between physicians and institutional care. But I worry that those strategies to improve health care delivery are now being more used more as tactics to maintain and even improve revenue. Heck, we don't seem to be able to get physicians to stop providing services even they admit are "low-value," as the Choosing Wisely initiative has tried to do.
As I've written before, when you have to create a new model that is supposed to be patient-centered (e.g., PCMH), and providers demand to get paid more just for participating it in, it's a pretty clear indication that our health care system isn't about patients but rather is about the providers.
The problem isn't the structures themselves but rather their focus.