More doctors are moving to corporate and hospital employment, jacking up prices & new WI lawsuit

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Movement of physicians from independent practice to hospital and corporate employment accelerated during COVID. By January 1st of this year, 74% of physicians in the Northeast were employed by hospitals or corporations according to a report by Avalere Health for the Physicians Advocacy Institute.  Half (52%) of Northeastern physicians work for hospitals and 22% for corporate-owned practices. The rate of hospital and corporate employment of Northeastern physicians grew by 19% compared to three years earlier. The Northeast tracked closely to the national trend. This is not a new trend but it has sped up since COVID.

A new analysis in Health Affairs of vertical integration – when physicians join health systems –  in Massachusetts from 2013 to 2017, increased prices by 2.1 to 12% for primary care services, and 0.7 to 6.0% for specialists. Prices rose the most in large health systems. In their annual survey, Medscape found that physician compensation rose sharply this year and have steadily grown over the years. Connecticut physicians are the eighth highest paid in the US.

A Wisconsin lawsuit has been filed alleging anti-competitive practices by a large health system that leads to artificially higher premiums for consumers and businesses. This mirrors two lawsuits filed in Connecticut against Hartford Healthcare for anti-competitive practices – one a class action also arguing that the practices raise premiums for consumers across the state.

Consolidation of providers into large health systems (vertical integration) and consolidation of health systems to each other (horizontal integration), are a main driver of rising healthcare costs and insurance premiums. This year Connecticut’s Senate overwhelmingly passed legislation to curtail the ability of large systems to jack up prices, but the bill died on the House calendar. Unfortunately, this means that large health systems have at least another year to overcharge consumers and employers without improving value.