Attorneys General: Physician-Employed Large Health Systems Unnecessarily Raising Health Costs

A healthy chunk of the nation's top law enforcement officials is about to lock horns with hospitals and physicians in a big way, adding fuel to a raging debate over hospital mergers and health care industry consolidation in the age of Obamacare.

Attorneys general from 16 states are siding with the Federal Trade Commission and insurer trade giant America's Health Insurance Plans (AHIP) in lawsuits against several large health system consolidations. The AGs and FTC argue that large health system employment of physicians unnecessarily raises health care costs since the large entities can leverage higher reimbursement rates from insurance companies and, consequently, promise doctors higher payment levels.

These consolidations are expected to keep occurring as the Affordable Care Act pushes health systems to pursue more efficient, cost-effective, and outcomes-oriented care management models. Such a model is easier to manage with a strong centralized authority -- but as U.S. District Judge B. Lynn Winmill pointed out in a ruling, these systems can also allow hospital groups to leverage their size and extort as much as 35% higher reimbursement rates for basic procedures without improving care efficiency, which is the ostensible purpose of the consolidations to begin with.

Read more at Medscape