Another Reason Medical Costs Are So High

Medical Costs have been going up, and up and up. We all know it. There are regular stories in the media. Some complain that if we do not get a handle and medical costs we, as a society, will go broke. Sometimes it is hard to explain why some medical costs rise. Other times it is quite easy. This is one of those really, really, easy times. The front page of a recent edition of the Atlanta Journal-Constitution the headline reads “Hospitals buy out, cash in.” The story explains how hospitals around Atlanta, and the rest of the country, are buying up medical practices. Doctors who had successful practices are selling them to hospitals, and in reality becoming employees. The purported reason for these “mergers” is to improve patient care and, presumably, to drive down costs. As the teenagers would say, Yeah, right! Just the opposite is taking place. The AJC articles focuses on Northside Hospital’s takeover of two independent and highly respected cancer practices. One patient, Richard Rosenberg, saw his out of pocket payment costs go from $20 to $212, and his insurance provider having to pay $5,661, up from $2,735. As Mr. Rosenberg describes, he is getting the same blood tests, seeing the same doctors and staff, and getting the same medication. All that happened is that the costs of those services to both Mr. Rosenberg and his insurer exploded. Why does the cost of services go up after a physician practice is gobbled up by a hospital? It’s simple. Hospitals can get away with charging more for any particular service than a doctor can charge. The AJC article points to a number of other patients who have experienced the same type of increases. Hospitals defend the higher charges by claiming that a doctor working in a hospital can provide better care patients than he or she could provide in a private office. That may be true in a few cases, but in cases like Mr. Rosenberg’s the care is exactly the same. The only change is the amount paid out of pocket by patients and by insurance companies who simply raise their rates to cover these new expenses. The only loses are patients who pay higher fees and everyone who purchases health insurance. The doctors who sell their practices are not the ones raking in the dough. A recent poll of physicians found that 68% of doctors have a negative view of the current state of medicine, and 77% of doctors have a negative view about the future of their profession. Patients are not happy. Doctors are not happy. Perhaps the CEO of Northside who earns $2.1 million per year is happy.