Medicare costs for certain procedures are being driven up by the increasing number of physicians employed by hospital groups, according to a new study.
The study examined the effect of rising hospital employment of physicians on Medicare and its beneficiaries and concluded there are increased costs.
Commissioned by the Physicians Advocacy Institute, the study was carried out by a team from the health care consulting firm Avalere Health.
Lead author Caroline Pearson, a senior vice president with Avalere, said the key purpose of the study was to find out where patients received care, the frequency of certain procedures in different settings and the cost differences.
"We looked at independent physicians and those employed by hospitals or health care," Pearson told Patient Daily, adding they found that those with employment arrangements were much more likely to perform procedures in a hospital setting.
And that means more expensive procedures, which drives up Medicare costs, she added.
The study found that for some procedures, employed physicians were seven times more likely to perform services in a hospital outpatient setting than independent physicians.
For certain cardiology, orthopedic and gastroenterology services, hospital employment of physicians results in up to 27 percent higher costs for Medicare and 21 percent higher costs for patients
The Physicians Advocacy Institute is a not-for-profit organization "established to advance fair and transparent policies in the health care system to sustain the profession of medicine for the benefit of patients," according to its mission statement. It is known to advocate strongly on behalf of independent physicians.
Pearson said the research was not groundbreaking – it is known the cost of performing procedures in hospitals is higher – but what has changed in recent years is the rising number of physicians employed by hospitals.
Physician employment by hospitals grew by 49 percent between 2012 and 2015, with more than 140,000 physicians were employed in 2015, the study noted.
Hospitals acquired 31,000 physician practices from 2012 to 2015, according to an earlier report by Avalere. In total, as of mid-2015, one in four medical practices was hospital-owned. This points towards an upward trend in hospital consolidation that could potentially decrease competition and accessibility to care.
Costs of procedures will never be equal when comparing hospitals and practices, if only because of the more advanced facilities in hospitals, Pearson said.
But she added that it was important to know whether the procedures needed to be carried out in an outpatient setting. Health care services provided in hospital outpatient settings are reimbursed at higher rates than when provided in physician offices. This affects the cost of Medicare as well as patient out-of-pocket costs, the authors concluded in their report.