Doctors Leaving Private Practice for Hospitals

A new survey by the Physicians Advocacy Institute and Avalere Health, a consulting firm, shows a significant increase in the number of physicians leaving independent practice and joining hospital-based health systems:

• From July 2012 to July 2015, the percentage of hospital-employed physicians increased by almost 50 percent, with increases in each six-month period measured over these three years.
• In 2012, one in four physicians was employed by a hospital.
• By 2015, 38 percent of physicians were employed by hospitals.

Good or bad? Well, color me skeptical. This acquisition spree is driven by new payment models which seek to reward providers for “accountable” care (which I suppose is better than unaccountable care). So far, the results of payment reform in Medicare have been trivial.

And the change does not appear to be solving an eminently solvable problem, the growing problem of “surprise” medical bills. These occur when a patient undergoes surgery in a hospital in his insurer’s network, but is then surprised by an expensive bill from an out-of-network anesthesiologist, pathologist, or other specialist who attended him in the hospital.

These misfortunes would not persist in any property functioning market. However, new research from the Brookings Institution suggests the problem is getting worse. Obviously, it should be diminishing if hospital ownership of physicians is growing and making care more “accountable.”

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book, Priceless: Curing the Healthcare Crisis, by John C. Goodman.