Hospital-Employed Physicians May Drive Up Costs

August 22, 2011 — The push by hospitals to employ physicians risks driving up healthcare services and costs without necessarily improving quality because these providers still operate in a largely fee-for-service environment, according to a new study published online August 19 by the Center for Studying Health System Change (HSC).

In this fee-for-service environment, hospital-employed physicians not only are paid on the basis of productivity but are also pressured to order more expensive care, write authors Ann O’Malley, MD, MPH; Amelia Bond; and Robert Berenson, MD.

"In one market," they write, "at least two cardiologists declined hospital employment offers because they perceived the pressures to drive up volume were greater than those in their mid-sized, independent cardiology group."

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