Hospital Affiliated Docs Paid More

A Wall Street Journal report, reported by writer Molly Gamble August 27 in Becker’s Health Care, puts the cabash on the idea that a hospital’s acquisition of physician practices increases efficiency. The report states that there has been a fivefold increase, since 2000, in the number of hospital-employed specialists who see patients in hospitals. The number of employed primary care doctors has gone up to 40% in the same time period.

The report states that doctors employed by hospitals generally receive a higher reimbursement because hospitals can negotiate larger reimbursement rates with commercial payers due to their stronger market power. According to the report, Medicare pays more for certain procedures if they are performed at a hospital.

The Becker’s report states that a 15-minute visit to a physician may cost Medicare about $70 at an independent practice whereas it will cost closer to $124 if it is billed as a hospital-outpatient service. The report cites prices from WellPoint, Inc. for spine MRIs in Nevada where the procedure costs $319 to $742 at a freestanding clinic, but $1, 591 to $2, 226 at a hospital.

Becker’s quotes Juan Davila, senior vice president for network management at Blue Shield of California, as saying, “there is a tangible, or sometimes really, really high increase in what we pay doctors once a group links up with a hospital system.” Richard Umbdenstock, CEO of the American Hospital Association, said, “You put a hospital name on something, and the expectations change immediately, ” according to the report.