More primary care physicians are affiliated with hospitals, leading to increased patient costs

(Press-News.org) PROVIDENCE, R.I. [Brown University] — A study by researchers at the Brown University School of Public Health shows that nearly half of all primary care providers (PCPs) in the United States are affiliated with hospitals, while the number of PCPs affiliated with private equity firms is growing and concentrated in certain regional markets.

Compared with PCPs at independent practices, those affiliated with hospitals or private equity firms charged higher prices for the same services.

The findings were published in JAMA Health Forum.

Health care consolidation is a driving force behind high health care prices in the U.S., said lead study author Yashaswini Singh, an assistant professor of health services, policy and practice who is affiliated with the Center for Advancing Health Policy through Research at Brown.

Because of a lack of data on the consolidation of primary care physicians, Singh said that it was difficult to quantify the trend.

“It's impossible, in the absence of price and ownership transparency, to really understand the trends in consolidation and corporatization in primary care, and then ultimately, what are the effects they are having on the prices you and I pay for health care,” Singh said.

The recent implementation of federal Transparency in Coverage rules, which require health insurers to disclose in-network negotiated rates for all services and for all contracted health care professionals, provided a novel opportunity to undertake this analysis, Singh said.

The researchers analyzed a total of 198,097 primary care providers and 226.6 million negotiated prices. They first identified hospital-affiliated and private equity-affiliated PCPs and then linked that information to pricing data derived from Transparency in Coverage datasets. 

They found that primary care physicians affiliated with hospitals increased from 25.2% in 2009 to 47.9% in 2022. Over the same period, 1.5% of PCPs in the U.S. became affiliated with private equity firms. While that number looks small, Singh said that the localized consolidation model of private equity means that the trend tends to be more pronounced in certain regional markets — Texas and Florida in particular.

Relative to independent PCPs, negotiated prices for office visits were 10.7% higher for those affiliated with hospitals and 7.8% higher for those affiliated with private equity firms.

These differences in prices persisted regardless of insurer.

“Our sample includes some of the largest national health insurers and suggests that, despite their size and power, insurers are either not able to or not willing to exert downward pressure on prices in negotiations with these entities,” Singh said.

Higher health care prices per se are not problematic, Singh said, especially in primary care, which has been characterized by under-investment. However, she said, consolidation is not associated with reinvestments that improve quality or access to care. 

“Higher payments might be a good thing if that expanded access to care, or attracted talented physicians within the specialty,” Singh said. “But we know from longstanding data in health economics and health policy that in general, the higher prices that result from consolidation do not seem to be reinvested in ways that improve the quality of care for patients or the compensation received by physicians.”

She added: “And so then the question becomes: are these higher prices just going back in the pockets of investors or executives rather than being invested in ways that can improve the overall care experience or workforce experience?”

In the study, researchers said that additional evidence on the growth in hospital and private equity affiliation in primary care can shed light on recent changes in physician organization and help guide competition policy in health care markets. This type of research may also help identify the sources of the wide variations in prices paid for physician services observed across geographic areas for similar services, they noted.

Additional study contributors include Christopher Whaley and Nandita Radhakrishnan from Brown and Loren Adler from the Brookings Institution.

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