What Happens to Costs When a Big Hospital Buys Your Doctor’s Private Practice?

It doesn’t take a trained economist to know that competition is a good way to keep prices down. That applies to the cost of gas and to the cost of health care.

Now, a new analysis by the National Bureau of Economic Research finds that the widespread acquisition of private physician practices by hospitals is pushing up health care prices across the country.

“Hospital systems have acquired so many physician practices that a majority of physicians in the United States now work for hospitals,” said Matthew Grennan, an associate professor of economics at Emory University and one of the study’s authors.

Past research has shown that the cost of care rises when one hospital buys another. For patients, that means fewer options. For hospitals, it can mean market monopolies.

The new research finds prices also rise when a doctor’s practice comes under the same large ownership umbrella.

For example, two years after a hospital buys an OB-GYN practice, physician prices are up $502, an increase of 15.1%.

Researchers recommend greater scrutiny of physician/hospital mergers. States could also play an important role by requiring hospitals and physicians to provide evidence of public benefit before transactions are final.

What do you think? Has your doctor’s practice been bought by a hospital or larger hospital system? How did it affect the cost of your care? Share your experience with Voices for Affordable Health.