Changing Business of Medicine: Hospital Consolidation of Phycian Practices

As noted in yesterday’s post, in addition to private equity, hospitals have been consolidating medical practices. One incentive has been that hospitals can often charge a “facility fee.”

NPR explains this practice by highlighting a patient with a 10-fold increase in the cost of a steroid injection: Her Doctor’s Office Moved 1 Floor Up. Why Did Her Treatment Cost 10 Times More?

An excerpt: The increasingly controversial charge — basically a room rental fee — comes without warning, as hospitals are not required to inform patients of it ahead of time…

Hospitals say they charge the fee to cover their overhead for providing 24/7 care, when needed. Stamatis also noted the cost of additional regulatory requirements and services “that help drive quality improvement and assurance, but do increase costs.

But facility fees are one reason hospital prices are rising faster than physician prices, according to a 2019 research article in Health Affairs….The Centers for Medicare & Medicaid Services has attempted to curtail facility fees by introducing a site-neutral payment policy. The American Hospital Association sued over the move and plans to take the case to the Supreme Court.

My take: When hospitals own physician practices, there are often hidden costs. NPR recommends: “Ask outright if there will be a facility fee — and how much — even if there has not been one before. If it’s an elective procedure, you can search for a cheaper provider.”

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