Study: Growing physician groups drive up medical costs

Under the Patient Protection and Affordable Care Act physicians are encouraged to work together to improve health outcomes and quality, but as a physician group's market share increases, it gains bargaining power with payers, which may in turn drive up medical costs, according to a study published in Health Affairs.

"The point is not to say that consolidation is a bad thing," lead author Eric Sun, MD, said in a statement. "But as we think about encouraging these kinds of mergers, we really want to weigh the costs against the benefits."

Researchers from the Stanford (Calif.) University School of Medicine found orthopedic surgeons in concentrated markets charged 7 percent more for knee replacements than surgeons in less concentrated markets between 2001 and 2010, even as the average cost of knee replacements nationwide dropped $261. In the most concentrated markets, fees for knee replacements increased $168 on average compared to the least concentrated physician markets.

The study compares knee replacement fees from orthopedic surgeons between 2001 and 2010 with the concentration of physician groups using the Herfindahl-Hirschman Index. The authors plan to examine next how the concentration of physician groups affects patient outcomes.


More articles on integration and physician issues:

7 statistics on the PPACA & physician practices
Valley Children's, Stanford partner to launch pediatric residency
How private vs. public medical schools affect the physician pipeline: 5 things to know

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