Over the past few decades there has been much consolidation in the healthcare field.  Many physician practices are consolidating to form larger practices. Why? Other physicians are being purchased by hospitals.  Independent practices are being purchased in order to stay financially viable.  

Hospitals are purchasing physician practices at an alarming rate.  Why are these practices being purchased and does it matter? When a hospital buys a physician practice, there are benefits to the hospital and to the doctor.  Hospitals make a tremendous amount of money from physicians.

http://www.merritthawkins.com/uploadedFiles/MerrittHawkins/Pdf/2016%20Merritt%20Hawkins%20-%20Inpatient-Outpatient%20Revenue-%20Press%20Release.pdf 

Should summarize article so that if the reader doesn’t read article he/she can still understand. 

When a hospital owns a physician practice, the physician can usually earn more money and decrease their workload.  As referenced in the article above, the hospital requires that the doctor abide by the policies and practices of the hospital.  The hospital also starts to pay for the doctor’s malpractice insurance. Under these policies, doctors are no longer able to perform many simple procedures  in the office. These simple procedures must be referred to the hospital. For example, a simple injection that cost $50 in the doctor’s office, now must be done in the hospital.  The charge for this injection in the hospital is $2,000. The physician no longer takes the time to do these additional procedures and is able to see more patients. The hospital earns more revenue by having the doctor see more patients and also by the additional referrals.  

These relationships have an adverse impact on insurance rates because they increase the cost of the claims. 

There are tools available that can help companies align the healthcare providers to lower costs.  Understanding how these alignments can have a positive impact on the overall health of your employees and their dependents at lower overall rates.