Wall Street Journal: Trend of Hospital-Employed Physicians Causing Concerns About Market Leverage

The burgeoning trend of hospitals buying up physician practices is causing concerns about controlling market share among health insurers and some regulators, according to a report by the Wall Street Journal.

The article did not further discuss regulators' concerns but quoted Karen Ignagni, CEO of America's Health Insurance Plans, as saying: "We've always been concerned about combinations that are being done to increase prices." It also quoted Paul Mango at the consulting group McKinsey & Co. as saying hospitals are buying up practices because they "want to essentially lock in volume, inpatient and outpatient."

The concerns come at a time when federal regulators are considering loosening antitrust and fraud requirements for hospitals starting accountable care organizations and other new payment arrangements, such as bundling. Richard Umbdenstock, CEO of the American Hospital Association, said "the goal of these new care arrangements is to produce real benefits and improve quality for patients" and that "there is plenty of federal and state oversight to ensure just that."

The trend is fueled by physicians' frustrations with running medical practices, the WSJ reports. William F. Jessee, MD, CEO of the Medical Group Management Association, said he expected to see "more physicians selling out to hospitals."

An MGMA survey indicates that 55 percent of practices were hospital-owned in 2009, up from 50 percent in 2008 and around 30 percent five years earlier. The physician-search firm Merritt Hawkins said 51 percent of its physician-searches were for positions with hospitals for the 12 months ended in March, up from 45 percent a year earlier and 19 percent five years ago. It added that the number of searches for physician groups and partnerships has dropped.

Read the Wall Street Journal report on hospital-owned physician groups.

Read more coverage of hospital-owned physician groups:

- Hospital-Owned Groups Showed Increase in Medical Revenue in 2009

- Survey Finds Hospital-Owned Practices Attracted More Physicians Than Independent Ones in 2009

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