Mergers and Acquisitions: Hospitals Are “Acquiring” Higher Payments After Aligning with Physician Practices

Financial integration between physicians and hospitals is leading to higher prices and spending in outpatient care.

Physician-hospital alignment, also referred to as integration, has captured the healthcare industry’s attention for nearly 25 years. The earliest initiatives began in the early 1990s, with many healthcare practice mergers/transactions having occurred since then.

A recent study tracked the relationship between changes in physician-hospital integration and concurrent changes in spending in 240 metropolitan statistical areas (MSAs) from 2008 to 2012. The sample included more than 7,300 non-elderly patients. Although levels of outpatient treatment had minimal changes over that time, the study found that annual outpatient spending per patient had increased by an average of $75 annually.

The study concluded that, for outpatient care, financial integration between physicians and hospitals has been associated with higher commercial prices and spending.


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