49% increase in hospital-employed physicians linked to $3.1B in Medicare costs, study finds

Medicare costs for four healthcare services rose $3.1 billion between 2012 and 2015, an increase a Physicians Advocacy Institute study links to a 49 percent uptick in physician employment by hospitals.

For the nonprofit advocacy group's study, conducted by Avalere Health, researchers examined practice patterns of employed physicians and how treatments performed by employed physicians would differ with practice patterns of independent physicians. The study assumed patients would receive the same procedures in the same geographic area, but in a different care setting.

The study found four cardiology, orthopedic and gastroenterology services cost Medicare $2.7 billion more when administered in hospital outpatient facilities instead of an independent practice. For patients, the services cost $411 million more in a hospital outpatient setting than if performed in an independent physician office.

When analyzing the specific cardiology, orthopedic and gastroenterology services, researchers also found hospital-employed physicians' practice patterns led to as much as a 27 percent increase in Medicare costs. For beneficiaries, those practice patterns were associated with a 21 percent increase in out-of-pocket costs, according to the study. 

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