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Continued Consolidation of Physician Practices by Hospitals

By August 2, 2018Commentary

Nothing in health care has angered me more than seeing the ongoing consolidation among providers, which increases market power and prices, while regulators and policymakers do nothing.  New research carried by Health Affairs details the consolidation of physicians within health systems, based on self-reporting, which means it could be under-estimated.   (HA Article)   The chart on the first page of the article tells it all.  It shows for several common specialties the trend in percentage of practices owned by hospitals or health systems from 2007 to 2017.  In 2007, no specialty had even 30% of practices owned by hospitals.  In that time period, oncology has gone from 20% of practices to 54%; cardiology has gone from 10% to 35%, and pulmonology from about 12% to over 30%.  Only dermatology has escaped a significant trend, with only 7% of practices not being independent in 2017, up from 5% in 2007.  For primary care specialties, in 2007 there was a fairly substantial ownership by health systems, 40% for multi-specialty pediatric practices, 21% for multi-specialty adult primary care, for example.  While the rate of growth in hospital ownership is slower than for the specialty practices, it was still significant, with multi-specialty pediatric going to 55%, adult multi-specialty primary care to 44% and women’s health from 11% to 30%.  Similar trends are seen in looking at surgical specialties; ownership of general surgery practices grew from 10% to 44%, orthopedics from about 8% to 25% and urology from 6% to 20%.  And hospitals aren’t just acquiring one practice, they usually acquire multiple practices in the same specialty; so the concern isn’t just vertical integration but the decrease in horizontal competition across practices.

There is no question that all this consolidation activity has raised prices; multiple pieces of research support this.  And there is equally little to no research that shows any real outcomes or quality improvement from consolidation.  So I don’t understand why it is permitted at all and I continue to believe that it should be ordered reversed by legislators.

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