2016 was the first year in which more physicians were employed by hospitals (53%) than were self-employed or working in a privately owned practice.
When hospital systems own the primary care centers, they can put pressure on physicians to refer patients to specialists within their network (which tend to be higher in cost).
WHY IS THIS HAPPENING?
Historically, primary care physician reimbursement is among the lowest of physician specialties. In order to recruit physicians, hospitals have been overpaying to bring those groups under their brand. By owning the supply chain, hospitals leverage other high margin services (such as surgery, chronic care treatments, etc.) to create a profit.
WHY IS IT A CONCERN?
Primary care providers have the greatest impact on the utilization of the health care system. As patients encounter precursors to chronic conditions (e.g. obesity, diabetes, osteoarthritis, heart disease), primary care providers can decide whether to engage in preventative care, treat the early stages of these conditions, or refer to a specialist.
Cases that get referred to specialists may move quickly through conservative treatment options into more expensive ones.
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