Doctor Rate Gaps May Be Short-Lived

Hospital systems’ acquisitions of doctor practices sometimes result in higher prices paid by insurers, as WSJ reports today. But while the two sides may be clashing now over rate bumps for physicians, both say the future is likely to look very different.

Insurers are increasingly cutting deals that begin to move away from the typical method of paying fees for each medical service. That complex system is under pressure, partly because critics believe it creates perverse incentives by rewarding medical providers for doing more procedures, and sometimes for pushing them to the most expensive setting — such as a hospital.

Hospital executives say their efforts to integrate with physicians are aimed at readying for this new world, when they will likely be paid to manage the health of an entire population, and rewarded for hitting quality and efficiency goals.

“Healthcare is changing to population health management and population health-based reimbursement,” UCLA Health System said in a statement.

The new partnerships and pay methods create “financial alignment between doctors, hospitals and ourselves,” says Juan Davila, Blue Shield of California’s senior vice president for network management. Blue Shield has seven such pacts around California.

The current system’s rewards for physician acquisitions, based on the pay differential between independent doctors and hospital systems, are likely to vanish, officials from both industries say.

“That ship has sailed,” said Kenneth Paulus, chief executive of Allina Health, a major system based in Minnesota. He said that by 2014, hospitals will be forced to sharply bring down costs so they can draw budget-conscious patients choosing coverage in the new marketplaces created by the federal health overhaul law.

The hospital systems will want to have health plans built around them, as insurers roll out “narrow network” designs that include fewer medical providers. “We’re all moving to a very transparent, retail-oriented marketplace,” he said.

Leave a Reply

Your email address will not be published. Required fields are marked *