- Email: [email protected]
Re: Physician Practice Competition and Prices Paid by Private Insurers for Office Visits
SOCIOECONOMIC FACTORS, UROLOGICAL EPIDEMIOLOGY AND PRACTICE PATTERNS
status in an effort to be more competitive. It is not unreasonable to worry that this change in status may be accompanied by a change in primary focus from delivering high quality care to maximizing profits. This study compares costs and outcomes in 237 hospitals that converted to for-profit status from 2003 to 2010 with 631 matched control hospitals. The authors found that the hospitals that converted to for-profit status improved their total operating margins an average of 2.2% during the study period (compared to 0.4% in the matching hospitals). The converting hospitals also improved their quality metrics compared to controls, while not experiencing different clinical outcomes or changing their patient mix. These findings are likely to motivate more hospitals to consider converting to for-profit status. For the model to work these hospitals must exercise tighter cost control and no doubt will pressure providers to comply with standardized local protocols and/or reduce variation in costs among similar cases. In some cases hospitals may elect to purchase practices and restrict privileges to selected providers. Urologists need to be aware of this possibility and be proactive in their dealings with these hospitals. David F. Penson, MD, MPH
Re: Physician Practice Competition and Prices Paid by Private Insurers for Office Visits L. C. Baker, M. K. Bundorf, A. B. Royalty and Z. Levin Stanford University School of Medicine, Stanford, California, National Bureau of Economic Research, Cambridge, Massachusetts, and Indiana University-Purdue University Indianapolis, Indianapolis, Indiana JAMA 2014; 312: 1653e1662.
Abstract for this article http://dx.doi.org/10.1016/j.juro.2015.03.042 available at http://jurology.com/ Editorial Comment: This interesting study underscores the paradoxical nature of a key component of the health care reform bill. On the one hand the Affordable Care Act indirectly encourages consolidation by proposing the formation of accountable care organizations and bundled payments for episodes of care. On the other hand consolidation, by its nature, discourages competition and effectively improves the bargaining power of the consolidated entity. In the current study the authors assess the relationship between the price of outpatient office visits and the degree of physician competition in 1,058 urban United States counties. They explore this relationship in total and by specialty, including urology. Not surprisingly, in counties where there is less physician competition (meaning greater provider consolidation) the price of an outpatient visit paid by private payers was higher, reflecting increased physician bargaining power. For large urological practices this is certainly good financial news. For policy makers the initial response will be to try to limit further physician consolidation, although this may not be the right thing to do. If a goal of health care reform is to create entities that exercise greater cost control while maintaining or improving the quality of care, then policy makers may have to accept the harms of less market competition for the benefits of greater centralization and coordination of care. David F. Penson, MD, MPH
2057
status in an effort to be more competitive. It is not unreasonable to worry that this change in status may be accompanied by a change in primary focus from delivering high quality care to maximizing profits. This study compares costs and outcomes in 237 hospitals that converted to for-profit status from 2003 to 2010 with 631 matched control hospitals. The authors found that the hospitals that converted to for-profit status improved their total operating margins an average of 2.2% during the study period (compared to 0.4% in the matching hospitals). The converting hospitals also improved their quality metrics compared to controls, while not experiencing different clinical outcomes or changing their patient mix. These findings are likely to motivate more hospitals to consider converting to for-profit status. For the model to work these hospitals must exercise tighter cost control and no doubt will pressure providers to comply with standardized local protocols and/or reduce variation in costs among similar cases. In some cases hospitals may elect to purchase practices and restrict privileges to selected providers. Urologists need to be aware of this possibility and be proactive in their dealings with these hospitals. David F. Penson, MD, MPH
Re: Physician Practice Competition and Prices Paid by Private Insurers for Office Visits L. C. Baker, M. K. Bundorf, A. B. Royalty and Z. Levin Stanford University School of Medicine, Stanford, California, National Bureau of Economic Research, Cambridge, Massachusetts, and Indiana University-Purdue University Indianapolis, Indianapolis, Indiana JAMA 2014; 312: 1653e1662.
Abstract for this article http://dx.doi.org/10.1016/j.juro.2015.03.042 available at http://jurology.com/ Editorial Comment: This interesting study underscores the paradoxical nature of a key component of the health care reform bill. On the one hand the Affordable Care Act indirectly encourages consolidation by proposing the formation of accountable care organizations and bundled payments for episodes of care. On the other hand consolidation, by its nature, discourages competition and effectively improves the bargaining power of the consolidated entity. In the current study the authors assess the relationship between the price of outpatient office visits and the degree of physician competition in 1,058 urban United States counties. They explore this relationship in total and by specialty, including urology. Not surprisingly, in counties where there is less physician competition (meaning greater provider consolidation) the price of an outpatient visit paid by private payers was higher, reflecting increased physician bargaining power. For large urological practices this is certainly good financial news. For policy makers the initial response will be to try to limit further physician consolidation, although this may not be the right thing to do. If a goal of health care reform is to create entities that exercise greater cost control while maintaining or improving the quality of care, then policy makers may have to accept the harms of less market competition for the benefits of greater centralization and coordination of care. David F. Penson, MD, MPH
2057