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When physicians work together, costs can rise

97187153_16040f08b7_zOnce upon a time, patients received care from a local doctor, who usually worked alone or with a few partners. Now, most physicians belong to large practices, which have standardized procedures and costs.

These mergers have been greeted warmly by regulators and the public, who believe that larger groups can take advantage of economies of scale. But these alignments could also give physicians greater bargaining power with insurers, a move that could push costs up, according to a new study by Stanford researchers.

Eric Sun, MD, an instructor of anesthesiology, perioperative and pain medicine, working with senior author Laurence Baker, PhD, investigated the fees charged by orthopedic surgeons for knee replacements between 2001 and 2010. They also ranked how concentrated physicians' health-care markets scored on a commonly used index.

They found that physicians' fees in markets with a high concentration of physician groups rose $168 compared to fees in the least concentrated markets — a jump of 7 percent.

The research has implications for the Affordable Care Act, which encourages physicians to join alliances. “The point is not to say that consolidation is a bad thing,” Sun concluded in our press release on the study. “But as we think about encouraging these kinds of mergers, we really want to weigh the costs against the benefits.”

The study appears in the June issue of Health Affairs.

Previously: Health-care policy expert Arnold Milstein weighs in on Medicare's plan to prioritize "value over volume", Steven Brill's Bitter Pill and What's the going rate? Examining variations in private payments to physicians
Photo by Waldo Jaquith

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