Association of Independent Doctors (AID) Comments on AHA Release Regarding Hospital Mergers
WINTER PARK, Fla. and WASHINGTON, June 20, 2013 /PRNewswire-USNewswire/ -- The Association of Independent Doctors (AID) issued a statement today, regarding the American Hospital Association's (AHA) recent press release on the purported benefits of hospital mergers and acquisitions. AID's statement follows:
On June 3, 2013, the AHA issued a press release[1] and accompanying report,[2] citing purported benefits of health care industry consolidation under hospitals. According to AHA, "[m]uch that has been written and said about hospital mergers and acquisitions is misleading."
Among the AHA's claims are: (a) hospital transactions in recent years have been "modest"; (b) hospitals should be "moving away from a structurally fragmented" health care system; and (c) this will "benefit the patients and communities," benefits are "compelling," and "mergers and acquisitions are supporting the changing landscape of health in a positive way."
In response, we shed light on these claims.
First, hospital consolidation in general has not been modest. In fact, the pace of consolidation in health care is unmatched by any other industry. According to a leading firm, the number of independent doctors (i.e., those not employed by hospitals), as a percentage of total doctors has declined from 57% in 2000, to a projected 36% in 2013,[3] while the number of hospital-employed physicians has skyrocketed.[4] The Medicare Payment Advisory Commission (MedPAC) reported that hospital-employed physicians and dentists grew by 55% from 2003 to 2011, and hospital-employed cardiologists tripled between 2007 and 2012.[5] Meanwhile, independent cardiologists during the period fell from 59% to 36%.[6] More than 100,000 independent doctors have exited the practice or become hospital-employed.[7] This may be the steepest decline for small business, in any American industry. The AHA's report also excludes acquisitions by private equity firms or physician groups, and other non-hospital-to-hospital transactions – and thus does not fully reflect hospital market consolidation.
Second, what the AHA calls a "fragmented" system, which it advocates should be discarded – is actually what most Americans would call competition. A system characterized by many providers, who compete on a level playing field, providing patients with the ability to make choices on the basis of the best quality and the lowest cost care, with information available to consumers as to cost differences among providers in advance of provision of service. This is the type of pro-patient, free market, competitive system we should be striving toward.
Third, and most importantly, notably absent from the AHA's press release and 12-page report, is any information about cost, affordability, and how hospital consolidation leads to lower prices for consumers. The AHA report states that these hospital transactions are "procompetitive and fully support the twin goals of higher quality and more affordable health care." But any claims of "compelling" benefits to patients should include impact on cost.
We therefore shed light on costs so that consumers are provided a more complete picture:
First, the decline of independent doctor practices, and increase in industry consolidation under hospitals, has coincided with a disturbing trend: During the past 10 years, health care costs per family of four, have more than doubled, and in 2012 exceeded $20,000 per year for the first time.[8]
Second, press reports that so-called full charges at hospitals grew an average 10% per year from 2000 to 2010, four times the rate of inflation.[9]
Third, press reports indicate substantially higher rates charged by hospitals than by independent practices -- for the same or similar procedures.[10] For example The Wall Street Journal reported that, in Nevada, an MRI at a free-standing center ranged from $319 to $742, while the same test at a hospital runs between $1,591 and $2,226.[11] The Wall Street Journal also cited 118% higher charges for diagnostic colonoscopies; 85% higher charges for electrocardiograms; and 49% higher charges for cardiac nuclear imaging -- when performed at hospitals.[12] In one example, a routine echocardiogram went up from $373 to $1,605, at the same facility, after the independent practice was bought by the hospital -- a more than four-fold increase.[13] The Orlando Sentinel reported that a patient's co-pay for a standard heart perfusion study at a hospital-employed cardiologist in Florida is 44% higher than at an independent cardiologist.[14] The Charlotte Observer reported that some hospitals are "routinely marking up prices on cancer drugs by two to 10 times over cost. Some markups are far higher."[15] The Cleveland Plain Dealer noted that when hospitals include their facility fee, costs"can result in charges that are two, three, or four times more costly for patients -- all for basically the same care."[16]
The MedPAC Report confirmed that hospital pricing is considerably higher than at freestanding (independent) physician practices. MedPAC noted, "in 2013 Medicare pays 141 percent more when a level II echocardiogram is provided in an OPD [hospital outpatient department] rather than in a freestanding physician's office."[17] A 15-minute office visit at an OPD costs Medicare 70% more, and the patient payment portion is also 70% more, than if the visit is to a freestanding physician office.[18] MedPAC noted, "Medicare and many private insurers pay higher rates for many services provided in OPDs relative to physicians' offices."[19] MedPAC also noted, "the migration of services to OPDs results in higher program spending and beneficiary cost sharing without significant changes in patient care."[20]
Indeed MedPAC concluded,"If the same service can be safely provided in different settings, a prudent purchaser should not pay more for that service in one setting than in another."[21]
Today, health care is less affordable than ever for the average American family. Industry consolidation and the decline of independent doctor practices play a substantial role in this dynamic, which inures to the detriment of all Americans.
More must be done to ensure the market remains competitive, so that patients can access the highest quality and most affordable health care. In every industry, competition is an important check against higher prices, diminished quality, and loss of consumer choice. Independent doctors have a critical role in our nation's ability to sustain affordable and high quality care, preserve patient choice, create jobs, impact the economy, and maintain a competitive marketplace.
About Association of Independent Doctors (AID)
The Association of Independent Doctors (AID) is a national trade association established to further the interest of independent doctors. AID was formed to educate patients, local businesses, legislators and regulators about the importance of independent doctors with regard to quality and cost of health care, patient choice, jobs, and the economy. More information about AID is available at: www.aid-us.org. AID is a 501(c)(6) entity.
[1] New Report On Hospital Mergers And Acquisitions Shows The Benefit To Patients And Communities, 6/3/2013. See http://www.ahanews.com/ahanews/searchNewsNow.jsp?date=06/03/2013.
[2] Id.
[4] The Wall Street Journal reported that the number of specialty physicians who see patients at hospitals and who are employed by the hospitals, has risen by four times since the year 2000, and the equivalent share of hospital-employed primary-care physicians has doubled in the same time frame. See http://online.wsj.com/article/SB10000872396390443713704577601113671007448.html.
[5] See Medicare Payment Advisory Commission (MedPAC) Report on Medicare And The Health Care Delivery System released on 06/14/2013, at p. 33. The report ("Report") is at http://www.medpac.gov/documents/Jun13_EntireReport.pdf.
[6] Id.
[7] See footnote 3. (Statistic for period 2000-2013.)
[8] See http://www.forbes.com/sites/danmunro/2012/12/30/2012-the-year-in-healthcare-charts/.
[9] See http://www.businessweek.com/news/2013-03-11/uninsured-americans-get-hit-with-biggest-hospital-bills.
[10] See Wall Street Journal, 8/26/2012, Same Doctor Visit, Double the Cost – Insurers say Rates Can Surge After Hospitals Buy Private Practices; Medicare Spending Rises, too. At: http://online.wsj.com/article/SB10000872396390443713704577601113671007448.html. See also http://articles.orlandosentinel.com/2013-04-03/health/os-doctors-unite-20130403_1_orlando-health-physician-partners-independent-physicians-independent-doctors.
[11] See http://online.wsj.com/article/SB10000872396390443713704577601113671007448.html.
[12] Id.
[13] Id.
[15] See http://www.charlotteobserver.com/2012/09/24/3549634/prices-soar-as-hospitals-dominate.html.
[16] See http://www.cleveland.com/healthfit/index.ssf/2012/09/costs_rise_for_patients_on_hig.html and http://www.ahipcoverage.com/2013/06/04/evidence-shows-provider-consolidation-leads-to-higher-health-costs-for-consumers-and-employers/.
[17] Report at page xii.
[18] Report at p. 32.
[19] Report at p. 33.
[20] Id.
[21] Report at p. xii.
SOURCE Association of Independent Doctors (AID)
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