Transparency's Role in the Fight for Physician Independence
One spring evening eight years ago, in the lobby of a cardiology group’s office in Central Florida, one hundred doctors gathered because they were angry. They were outraged that the local nonprofit hospital systems kept buying up medical practices, turning independent doctors into hospital employees. All around them, doctors were selling their autonomy for steady paychecks, while inadvertently causing health-care costs to skyrocket, causing quality to plummet, and communities to suffer financial harm as these tax-exempt hospitals pulled millions of dollars off the tax rolls.
The doctors in the room wanted to fight this unhealthy trend, which was happening all over the country. Fortunately, three community business leaders — two CPAs and a health-law attorney — had organized the meeting to help them do just that. I attended that inaugural meeting of the Association of Independent Doctors (AID) as a health reporter. I wrote an article that appeared on the front page of the Orlando Sentinel the next day, not knowing I was writing my future job description. Fifteen months later, the founders asked me if I would run the association. Since then, I have had the honor to serve as the collective voice for a group of doctors fiercely dedicated to preserving the doctor-patient relationship, eliminated the middle-players, keeping care accessible and affordable, and supporting the mission the founders unveiled that night, a mission that has not changed:
- Stop the consolidation of hospitals and medical practices.
- Increase price transparency.
- Eliminate facility fees and move toward site-neutral payments.
- Enforce anti-trust laws.
- Stop the abuse of the tax-exempt status by nonprofit hospitals.
While we have made progress in each of these areas, much remains to be done to save this threatened group of doctors. However, in my seven years of fighting for this cause, I have realized that of all AID’s worthy goals, none is more important than the fight for health-care price transparency. If we achieve true, systemwide health-care price transparency, the other goals will take care of themselves, and America’s doctors as well as all Americans would be much better off.
For consumers, the benefits of knowing prices upfront are obvious. They would be able to shop for health care the way they shop for clothes, cars or groceries. Price competition would enter the market causing prices to drop dramatically, making care and coverage more affordable. Lower costs would also lead to better access and more choice.
Less obvious, perhaps, are the equally significant benefits to physicians. Although doctors are often blamed along with hospitals and insurance companies for the high and hidden prices of health care, DOCTORS ARE NOT THE PROBLEM. Most doctors are on the patients’ side. They want price transparency, too. Doctors want to be able to tell patients the price of their care, but they often don’t know either. Most doctors don’t set their prices. Hospitals, insurance companies, and the government tell doctors what they’ll get paid. Price transparency would help doctors take care of their patient's physical health and financial health, while also reversing the unhealthy trend of hospitals and private equity groups buying up their practices. Here’s what the disinfecting power of sunlight would expose.
When hospitals acquire medical groups (and by extension their patient base) they expand their market share. That expanded market share gives them greater bargaining power with third-party payers. They leverage that to negotiate for higher reimbursements, which drive up costs. Hospitals also, thanks to deals they’ve struck with Congress, get to layer in facility fees, bill-padding charges that add zero value and which independent doctors don’t charge. These facility fees can drive up the cost of care three to five, even ten times. Multiply that cost increase by the growing number of doctors becoming employed physicians, and you can see the compounded impact that higher reimbursements and facility fees have on our health-care system. These higher payments give hospitals not only the means, but also the incentive to buy up medical practices, and lure doctors out of private practice.
When health-care prices are finally in the sunshine, consumers will realize that choosing an independent doctor is far less expensive than going to one employed by a hospital, health system, or private-equity group. As patients’ value-driven choices steer them toward independent practices, fewer will choose to get care from more expensive hospital outpatient settings. Price transparency would also expose facility fees bringing them into question and ideally extinction.
Once hospitals are forced to eliminate facility fees and lower their prices, much of their incentive to acquire medical practices will disappear. Some might even begin to divest themselves of the doctors they’ve acquired as their profit margins wane. As buying up medical practices becomes less lucrative for hospitals and private equity groups, market monopolies will unwind. Health-care consolidation, a leading driver behind soaring health-care costs, will slow as hospitals find it more profitable to release their employed physicians from their contracts and let them practice autonomously again.