1. Written by:
Deepak A. Kapoor, M.D.
Recently, investigative reports have
shed light on a serious yet underreported
problem: hospitals’ role in perpetuating
spiraling health-care costs. Differential
reimbursement policies have enabled
hospitals to acquire thousands of physi-
cian practices nationwide, consolidating
their market control in many communi-
ties. For example, the American College
of Cardiology reports that since 2007, the
number of hospital employed cardiolo-
gists has more than tripled, while the
number in private practice has fallen 23
percent. This trend extends to physician
recruitment: recent surveys indicate that
hospital employment is now preferred
by new graduates over traditional private
practice.
Historically, hospitals are the least ef-
ficient, most expensive site of service for
medical care. Unfortunately, hospitals are
rewarded for this inefficiency by being
reimbursed at higher rates than physi-
cians’ offices for providing exactly the
same service. These increased costs are
passed to patients and employers through
higher insurance premiums; these costs
also strain the solvency of state and fed-
eral health-care programs.
It has been reported that Medicare is pay-
ing more than a billion dollars annually
for the same services because hospitals
can charge more when doctors work for
them. Whether for diagnostic imaging,
surgical services, chemotherapy or thera-
peutic radiation, hospital reimbursement
for outpatient services are often multiple
times that for physician offices or ambu-
latory surgery centers. In fact, the Deficit
Reduction Act capped reimbursement for
medical imaging procedures in the physi-
cian office at the outpatient hospital rate
— thus, all such procedures cost the same
or less at physicians’ offices than hospi-
tals. Unfortunately, no such constraints
exist on bloated hospital charges.
Those advocating hospital takeover of
community practitioners argue that this
improves efficiency and outcomes, but
such unrestrained acquisition can result in
dangerous hospital monopolies. Reports
indicate that some physicians working
for Health Management Associates were
pressured to increase revenues both by di-
recting patient referrals to doctors work-
ing for the same hospital and by meeting
emergency room admittance quotas.
HMA, the fourth largest for-profit hospi-
tal chain in the U.S., with nearly half of
its revenues coming from Medicare and
Medicaid programs, was accused of set-
ting arbitrary benchmarks for physicians
admitting patients in order to increase
profits, regardless of medical need. This
unethical behavior puts ill patients at
direct risk for hospital acquired infections
and other complications, further reducing
access and increasing costs.
Technological advances have enabled
community-based physicians to of-
fer integrated care in the independent
practice setting — which allows patients
to be diagnosed and treated by different
specialists under one roof or organized
electronically into virtual groups — pro-
viding patients with efficient, accessible,
high-quality services. These integrated
physician groups are able to improve ac-
cess and control costs while maintaining
traditional doctor-patient relationships.
These groups serve the added benefit of
effectively counterbalancing hospital
healthcare monopolies, providing patients
with an important community alternative
to monolithic healthcare conglomerates.
If the disproportionate payment sys-
tem presently in effect continues, such
groups will have no choice other than to
close their doors or sell their practices to
hospitals; ultimately forcing patients into
more expensive, less convenient sites of
service.
Fundamental to the American ideal of fair
play is the notion of equal pay for equal
work. Indeed, the Medicare Payment Ad-
visory Commission has embraced this by
recommending fee parity for outpatient
evaluation and management visits in both
hospitals and physicians’ offices. The
future of healthcare depends on control-
ling costs while preserving access and
improving outcomes regardless of site
of service; leveling the reimbursement
playing field is an important first step in
this direction.
Deepak A. Kapoor,
M.D. is president of the
Large Urology Group
Practice Association,
Schaumburg, IL., as
well as chairman and
CEO of Integrated
Medical Professionals,
PLLC, the largest independent urology
group practice in the United States.
Patients deserve high-quality care
without excessive costs
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Published on January 29, 2013