I'm Shocked, Shocked

By Kim Bellard, October 22, 2015

Some new research on the effect of physician practice arrangement has on spending offer some disappointing -- but not entirely surprising -- results.

Take physician groups. The death of the independent physician practice, working solo or in a small practice, has long been predicted. Honestly: would you rather be treated by a doctor practicing alone, or by one at the Mayo Clinic? Physician groups allow for things like development of best practices, administrative efficiencies, and, in this era of Big Data, larger data sets that can be used to improve patient care. When it comes to physician groups, bigger would seem to be better.

If physician groups are good, the theory goes, then integrating them clinically and financially with hospitals, such as through partnerships or common ownership, should even better.

The AMA says solo practice physicians now are only 17% of all physicians, down from 40% in 1983, and that physician ownership of their practice has declined from 76% in 1983 to just over 50% now. Our health care system, it would seem, is destined to be made up of large physician groups, many of which will be owned by hospitals.

Too bad both larger groups and hospital ownership apparently end up costing us more.

A new study in Health Affairs found that as physicians concentrate in larger groups, prices tend to go up, at least for the 15 high volume, high cost procedures the authors looked at. It might seem that whatever savings might be gained by becoming part of a group are not being passed on to consumers (or their health plans), and/or larger size allows groups to bargain for better reimbursement rates from payors.

An earlier survey, by one of the lead authors of the new study, found that more competition among physicians did, in fact, result in lower prices, at least for office visits. The moral appears to be, if you don't want to compete with them, join them!

Then there is the hospital ownership effect. A study in JAMA Internal Medicine found that increased hospital/physician financial integration led to greater spending, primarily in outpatient care and almost entirely due to higher prices, not higher utilization. The AHA protests that the study "is not reflective of the changes happening in today’s health-care market," citing newer value-based payment arrangements and hospital price increases that are at historically low levels.

Maybe the AHA is right. Maybe once we move more fully into the wonderland of value-based payment arrangements everything will work out: better quality for same or lower costs.

I've lived through DRGs, RBRVS, capitation, global capitation, staff model HMOs, IPAs, and an array of cost/quality incentive programs -- each of which was supposed to be the next magic bullet -- so I'm not holding my breath that payors will finally be able to outsmart providers when it comes to controlling revenue.

Don't get me wrong: I've long been a believer both in large physician groups and in clinical integration. But I worry that those strategies to improve health care delivery are now being used more as tactics to maintain and even improve revenue.

As I've written before, when you have to create a new model that is supposed to be patient-centered, and providers demand to get paid more just for participating it in, it's a pretty clear indication that our health care system isn't about patients but rather is about the providers.

The problem isn't the structures themselves but rather their focus.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting