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Hospital Acquisitions Increase Patient Costs

Update Date: Oct 22, 2014 11:34 AM EDT

The ongoing trend of hospitals merging with medical groups and physicians practices in an effort to improve the coordination of patient care is failing and instead increasing the cost of patient care, according to a new study. 

"This consolidation is meant to better coordinate care and to have a stronger bargaining position with insurance plans," said study lead author James Robinson, professor and head of health policy and management at UC Berkeley's School of Public Health, in the press release. 

"The movement also aligns with the goals of the Affordable Care Act, since physicians and hospitals working together in 'accountable care organizations' can provide care better than the traditional fee-for-service and solo practice models. The intent of consolidation is to reduce costs and improve quality, but the problem with all this is that hospitals are very expensive and complex organizations, and they are not known for their efficiency and low prices."

The study analyzed four years of data, from 2009 to 2012, on more than 150 major medical groups and 4.5 million patients in California. 

"Hospital-owned medical groups usually are expected to conduct ambulatory surgery and diagnostic procedures in the outpatient departments of their parent hospital, but hospital outpatient departments are much more costly and charge much higher prices than freestanding, non-hospital ambulatory centers," Robinson said.

He added that public policy should not encourage mergers and acquisitions as a means of promoting collaboration, but instead policymakers should consider supporting the use of bundled payments for hospitals and physicians to improve coordination of care.

"Hospitals are an essential part of the health care system, but they should not be the center of the delivery system," said Robinson. "Rather, physician-led organizations based in ambulatory and community settings are likely to be more efficient and provide cheaper care."

The findings of the study were published in the Journal of the American Medical Association. 

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