Physician Employment Impact on Medicare Spending

On behalf of PAI, Avalere researchers examined how the increase in physician employment over a three year period between 2012-2015 impacted Medicare spending, including beneficiary spending.   Avalere looked at a 22-day episode of care for four Medicare-covered services - echocardiograms, diagnostic cardiac catheterizations, colonoscopies and arthrocentesis - and found that Medicare paid 2.7 billion more for services provided by employed physicians than if those physicians were independent.  Medicare beneficiaries faced $411 million more in financial responsibility for those services.  Employed physicians were found to perform a higher volume of services in the hospital outpatient department setting that in physician offices, and those services are reimbursed at a higher rate than the same services provided in the physician office setting.

Download the study and press release here.

Issue Brief on Provider Consolidation and the Impact on Health Care Spending (PDF)

This brief explores the ongoing trend of hospitals, health systems and venture capital firms acquiring physician practices and employing physicians.  In ongoing research collaboration with Avalere Health, PAI has released several studies relating to this trend and the impact that this type of consolidation has on health care spending by payers and patients alike.  Key findings include: 

• Between July 2012 and January 2018, hospital-acquired physician practices increased from 35,700 in 2012 to 80,000. Physician employment grew by more than 70% over that period. 
• There is a significant increase in spending when services are delivered in hospital-owned settings versus the physician office setting.  As physician practices are absorbed by hospitals and other large entities, payments by payers and patients increase.