Calif. Physician-Owned Medical Groups Have Lower Care Costs
The cost of patient care at hospital-owned medical groups in California is 10% to 20% higher than the cost at independent physician groups, according to a study published Tuesday in the Journal of the American Medical Association, the Los Angeles Times reports.
Details of Study
For the study, researchers from UC-Berkeley analyzed the medical spending of about 4.5 million HMO patients at 158 medical groups between 2009 and 2012. The data were obtained from the Integrated Healthcare Association and were adjusted for differences in patient health and cost variances by region (Terhune, Los Angeles Times, 10/21).
Groups were categorized as owned by:
- Local hospitals or hospital systems; or
- Large hospital systems that serve several regions in the state (UC-Berkeley release, 10/21).
Of the 158 medical groups included in the study, 75% were owned by physicians.
Researchers found that medical costs were 19.8% higher at medical groups owned by large health systems, compared with a physician-owned group.
Meanwhile, costs for local hospital-owned groups were 10.3% higher than independent physician groups (Los Angeles Times, 10/21).
Lead author James Robinson said the higher costs can be attributed to the expectation that physicians admit their patients to the higher-priced hospital that has acquired their medical group. He said, "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" (UC-Berkeley release, 10/21).
According to the Times, mergers between hospitals and physician groups are intended to better coordinate care, but some experts say that can be achieved without mergers, which can reduce competition and drive up costs.
Suzanne Delbanco, executive director of Catalyst for Payment Reform, said, "There may be some cost efficiencies internally, but the savings aren't passed along to the consumer or the employer paying for the care."
Meanwhile, the California Hospital Association said the partnerships can better align incentives among providers and create a more efficient care delivery system (Los Angeles Times, 10/21).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.