In the Journals

Patient costs greater at hospital-owned physician groups

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October 28, 2014

Hospital-owned physician groups, often aggregated in order to provide coordinated care, had higher costs per patient than physician-owned organizations, according to study results.

Data spanning 2009 to 2012 on all expenditures incurred by patients in California, including hospital, pharmaceutical and other costs, were provided by the Integrated Healthcare Association, an association of insurers, and Truven Health Analytics. The expenditures were measured by the amount paid by the insurer, not billed charges, and instances of expenses exceeding $100,000 for a single patient were excluded to avoid confounding the results by including small numbers of very sick patients. Data for mental health services, which are paid separately under the system, were excluded in the study led by the University of California, Berkeley.

Researchers calculated annual trends in expenditures per patient between 2009 and 2012 stratified by ownership type, structure and size. Expenditures were categorized as physician-owned (n=118), local hospital-owned (n=19) and multihospital system-owned (n=21), and each was analyzed.

Results showed that costs per patient were 19.8% (95% CI, 13.9%-26%) greater in multihospital-owned organizations than in those owned by physicians. Patients of local hospital-owned organizations incurred 10.3% (95% CI, 1.7%-19.7%) higher expenses than those of physician-owned organizations.

In organizations owned by local hospitals, annual patient costs were $435 (95% CI, $105-$766) more than the amount paid to physician-owned hospitals, and $704 (95% CI, $512-$895) higher in multihospital systems.

“These findings are in contrast to the hope and expectation that organizational consolidation of physicians with hospitals would result in greater coordination, and hence lower expenditures,” the researchers wrote. “Policymakers must strive to ensure that hospital acquisition of medical groups and physician practices does not lead to higher expenditures.”

Disclosure: The researchers report no relevant financial disclosures.

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