Physician-Hospital Integration: “Same Doctor Visit, Double the Cost”

“Same Doctor Visit, Double the Cost” – this is the title of a recent Wall Street Journal article written by Anna Wilde Mathews, which provides a view on the hospital-physician integration phenomenon. The article describes the higher fees charged by hospitals that result when physicians become employed by hospitals.

It is our experience that physicians would generally prefer to remain independent, but they believe that Medicare reimbursement, which often paves the way for reimbursement by private insurers, is pushing them to become hospital employees. It’s not so much that the hospital is paid at a higher rate as it is that reimbursement to physicians is so low that they believe they have little choice. There are some conspiracy theories being floated that, in fact, this is Centers for Medicare & Medicaid Services’ (CMS’s) plan, as a kind of short cut around the Accountable Care Organization (ACO) pilot projects that will result in integrated care and purely bundled payments (rather than fee for service) that will be made to hospitals, who then will determine what to pay their employed physicians. As we all know, health care reform is going to happen in one form or another, so this will be an interesting area to watch.


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