The GAO has released a 37 page report on what it views as perverse incentives for hospitals to acquire physician practices and rebrand them as hospital-affiliated outpatient locations. The report, "Increasing Hospital-Physician Consolidation Highlights the Need for Payment Reform," is online here. For Medscape's coverage, here.
Whether the new wave of consolidation of hospital, physician, and other health systems raises efficiency, raises prices, or both, is a matter of intense public debate. The GAO report focuses on a particular incentive, under which a "hospital outpatient facility" visit can be paid considerably more than a "private physician office visit" and the extra money can be captured just by rebranding a physician office complex as an outpatient branch of a hospital. Legislation to curb this appeared suddenly in October (my blog, and links, here; Bloomberg October article, here).
The GAO report keeps up the pressure on this policy issue. But journalists have been writing about the issue here and there for at least five years. The GAO reports that from 2007 to 2013, the number of "vertically integrated physicians" has almost doubled, from 96,000 to 182,000. Every mid level office visit pays $50 more in a "vertically integrated" aka hospital-branded clinic. For a doctor who sees 20 patients a day, that's $1000 a day more. As the late night television ads used to say - "Free Money!"
There are some examples where the hospital capture of a physician office lowers reimbursement, particularly in the lab field, where virtually all clinical chemistry and many surgical pathology services become bundled accessories, not paid separately, to a primary clinical event.