Larger healthcare institutions are progressively combining with or acquiring primary care physicians and their practices, marking a significant shift in the healthcare landscape. A recent study from the Harvard T.H. Chan School of Public Health shows evidence against the potential benefits of such consolidation, such as simpler administrative processes or better care coordination. According to their findings, primary care physicians associated with larger health systems tend to drive up patient care spending (Sinaiko et al., 2023).

“Primary care physicians associated with larger health systems tend to drive up patient care spending.”

Patients with primary care physicians associated with large health systems witnessed a roughly: 

• 23% increase in specialist visits, 
• 14% rise in emergency department visits and 
• 22% more hospitalizations 

This resulted in an average $357 increase in total medical expenditures per patient year. The bigger picture is clear: When physicians integrate vertically with larger health systems, costs could spiral, challenging the long-held belief that consolidation results in economies of scale and decreased spending.

“The bigger picture is clear: When physicians integrate vertically with larger health systems, costs could spiral, challenging the long-held belief that consolidation results in economies of scale and decreased spending.”

1. Preserving Patient Choice:

A patient’s primary care physician shouldn’t have any vested interest in a specific healthcare system, as this could sway the patient’s choice of specialists. Due to their lack of affiliation incentives and sole focus on patient needs, independent doctors’ referrals are more likely to be objective. 

2. Price Transparency

Transparency in healthcare pricing is more important than ever as healthcare prices continue to rise. Independent physicians are more likely to offer more transparent and competitive pricing because they are not subject to the price controls of large healthcare organizations. In order to build trust with their patients and give them the information they need to make educated financial decisions, privately owned practices can be transparent about their pricing.  HealthMeDocs is one example of this trend; it helps patients understand the bundled, cash-based pricing of independently held practices. 

Hospitals generally collect administrative and facility fees to cover the high costs associated with running complex organizations, from meeting regulatory requirements to ensuring the upkeep of expensive infrastructure and specialist equipment. Because of these factors, hospital care can be very expensive. Ambulatory surgery centers (ASCs) and solo clinics can avoid these costs since they run more efficiently and have lower overhead expenses. Therefore, these organizations are a financially viable option for many patients because they may offer the same services at a much lower price.  Studies conducted in the early 2010s by the ealth Care Pricing Project show that different types of hospitals have significantly different prices. It has been demonstrated that HOPDs charge significantly more than ASCs for the same procedures. We observed that HOPDs charged an average of 3.8 times as much as ASCs for the same services (Cooper et al., 2018). 

3. The Importance of Disclosure

If a primary care doctor is part of a bigger health system, they should tell their patients about it. Understanding the possibility for bias in a healthcare provider’s recommendations can be aided by a patient’s knowledge of their provider’s professional affiliations. 

4. Nurturing Local Care

Keeping physicians independent can help sustain local, community-focused care. Smaller practices are often deeply embedded in their communities, offering personalized care experiences. The risk of consolidation is that this local flavor, which many patients value, might need to be recovered.

Improved care coordination is a possible benefit of vertical consolidation, but this advantage must be weighed against the concerns noted in the most recent study. Is there a quick fix? Promote open pricing and disclosure of all relevant relationships. As patients learn more about the affiliations of their providers and the financial ramifications of their healthcare decisions, they will be better able to make decisions that meet their health and financial goals.

Maintaining the independence of practicing physicians is essential to ensuring open, unbiased, and community-centered care in an ever-changing healthcare environment.

Sources:

Sinaiko, A. D., Curto, V. E., Ianni, K., Soto, M., & Rosenthal, M. B. (2023, September 1). Utilization, Steering, and Spending in Vertical Relationships. JAMA Health Forum – Health Policy, Health Care Reform, Health Affairs | JAMA Health Forum | JAMA Network. https://doi.org/10.1001/jamahealthforum.2023.2875

Cooper, Z., Craig, S. V., Gaynor, M., & Van Reenen, J. (2018, September 4). The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured*. The Quarterly Journal of Economics, 134(1), 51–107. https://doi.org/10.1093/qje/qjy020