U.S. Hospitals Buying Physician Practices Raises Care Prices, Study Finds
TL/DR –
A study co-authored by Yale economists has found that the trend of US hospitals buying out private physician practices has resulted in higher medical care prices without an improvement in quality. The study showed a 71.5% spike in hospital acquisition of private practices from 2008 to 2016, with hospitals owning 47.2% of such practices by 2016. The researchers ascertained that 99.9% of these acquisitions fell below federal reporting thresholds for business mergers, causing a significant transformation in the healthcare industry without any antitrust scrutiny.
A Sharp Uptick in U.S. Hospitals Acquiring Private Practices
The surge in U.S. hospitals acquiring private physician practices has led to a notable rise in medical care costs without any notable improvement in quality, reveals a new research. This trend is challenging federal regulators who are unequipped to review the numerous mergers taking place each year.
Significant Growth in Hospital Ownership of Physician Practices
The research utilized unique data and machine-learning methods, showcasing a 71.5% jump in hospital ownership of physician practices from 2008 to 2016. By 2016, hospitals owned 47.2% of private practices, nearly doubling the proportion of physicians employed by hospitals.
The findings are featured in a National Bureau of Economic Research working paper.
Impact on Healthcare Costs
Analyzing childbirths, the researchers discovered that two years post a hospital’s acquisition of an OB-GYN practice, hospital charges for labor and delivery rose by an average of $475 (a 3.3% increase), while physicians’ prices increased by $502 or 15.1%. The research attributes reduced competition as the cause for price hikes.
The study estimates that 99.9% of the analyzed acquisitions were under federal reporting thresholds for business mergers, indicating that the healthcare industry has undergone a substantial change with almost no antitrust scrutiny.
Calls for Regulatory Attention
“The drastic rise in hospital-physician mergers has reshaped the $1 trillion-dollar physician industry, significantly inflating prices for patients and insurers without enhancing care quality,” said Zack Cooper, a health policy and economics associate professor at Yale. He further highlighted the lack of regulatory resources to monitor the rapid pace of transactions in the numerous small physician practices.
The study was co-authored by notable economists from Yale, the University of Wisconsin-Madison, Harvard University, the University of California, San Francisco, and Emory University.
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