Why physicians shouldn't sell out (to hospitals)

We are not anti-business, but we are pro-consumer. We are pro-competition, pro-physician independence, and pro-affordable quality healthcare access to average people. 

Did you know?

  • Hospital-affiliated physicians generate on average $2,378,727 for their hospital. -Source
  • Cardiovascular surgeons top the list with $3,697,916 a year on behalf of their affiliated hospitals. -Source
  • The average for all physicians in 2019 ($2.378 million) is up from $1.563 million in 2016. -Source
  • Family physicians generate 9x the revenue for a hospital vs their average starting salary and orthopedic surgeons 6x more revenue vs their average starting salary. -Source
  • For the first time in the US employed physicians outnumbered self-employed physicians. - Source
  • Other sources report that only 1 in 3 physicians today are independent.
  • Today suicide among doctors is the highest of any profession; one doctor dies by suicide in the US every day. -Source

Hospitals and private equity are buying up physician practices.

According to multiples sources and this Medical Economics article, hospitals and private equity firms have been opening their war chests to purchase private practices around the country. This makes perfect financial sense being that each bought doctor generates on average $2.378 million in net revenue for an affiliated hospital. It could be argued that consolidation helps businesses control and lower costs of delivering services.


Who wants to play monopoly?

It could also be argued that this trend drives up patient costs (insurance costs, taxpayer costs) as healthcare systems create monopolies in various cities and regions. For example, facility costs are fees tacked on my hospital systems for every procedure a doctor performs in any of the clinics owned by that hospital. According to this Medical Economics article a treatment that costs $500 in an independent practice, now costs $1500 or $3000 after a hospital buyout.

But it's legal... 

The federal government determines Medicare pricing and Medicare pricing determines prices for all medical procedure for all people. Doctors in independent practices must use prices based on The Physician Fee Schedule while hospitals are permitted to charge via the Outpatient Prospective Payment System. Hospitals are permitted to often charge several times more because the system allows facility fees. So, Medicare pays $116 for a visit to the doctor in an outpatient hospital clinic and $46 for the same level visit to an independent doctor. - Source

In that same vein, how about that snake bite venom which the pharmaceutical company sells on average for $3,198 (can be had for $200 in Mexico) and a hospital charged a young girl last summer $67,957 for 4 vials administered to her for a suspected pit viper bite. That article and hospital bill can be read here at NPR.

"It's the prices, stupid: why the United States is so different from other countries.”

In the 2003 study entitled "It's the prices, stupid: why the United States is so different from other countries," published by Princeton health care economist Uve Reinhardt he and fellow authors concluded that US healthcare was more expensive than comparable countries not because of utilization or quality, but because of prices... just higher prices.

That conclusion was again confirmed in this 2018 study by Harvard Chan School of Public Health and the London School of Economics in JAMA. They concluded that price, interpreted as unjustified markups on goods and services by drug and device companies, insurance companies and hospitals, is the most important factor determining US outlier healthcare prices.

With pointed language Arthur Gale, MD writes,

"All of these managed care schemes to lower health care costs basically serve as a smoke screen to divert attention away from the true cause of high medical costs-overpricing and profiteering. An egregious example of hospital overpricing was highlighted in Elisabeth Rosenthal’s book “An American Sickness.” The author describes how the consulting firm Deloitte and Touche told hospitals throughout the U.S. “you can increase the amount you bring in just by manipulating how you bill.” Hospitals throughout the U.S. have scrupulously followed this advice."

Where do we go from here?

Doctors are burning out in record numbers while losing independence to hospitals, enduring intrusions into practice by middlemen, and forced to hire small armies to keep up with medical records, claims processing, billing and collection. Many doctors are understandably selling out to hospital systems.

Others are understandably transitioning to direct pay models that promote going back to work for patients, practicing individualized medicine, reducing manipulation from outside entities, and improving quality of life for patient and doctor alike.

The way forward for our nation's healthcare system may take any number of forms, but we believe a solution that eliminates middlemen, protects the patient-physician relationship, and makes resources available to educate, coach, and encourage better diets and more physical activity is a good start.



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