Summary: Fewer and fewer doctors in the US are self-employed, while more are employed by hospitals. That is a direct result of government policy, sharply accelerated by Obamacare. The trend will be damaging to American health care. It is still possible to reverse the decline, but powerful forces want it to continue. A Foolish And Dangerous Paranoia Doctors effectively can't own new hospitals any more. That's because the Big Hospital lobby convinced the leftists who designed Obamacare that physicans owning hospitals was a conflict of interest. That's right: according to that theory, the people who have devoted their lives to the study of medicine want to own hospitals so they can profit by withholding care, or by overcharging for it. The trouble with that line of reasoning is that the non-physicians in charge of hospitals and insurance companies have no such conflict. Their incentives are to provide as little care as possible while charging as much as they can. Their desire to protect their personal reputations and adherence to ethical code are not as strong as for physicians. If you could invent the kind of person to run a health care business, you would invent a physician. To reverse this, repeal Obamacare. The Costs While half of all physicians currently work for independent practices, three of four doctors hired this year will go to work for hospitals, according to one study. As Dr. Scott Gottlieb wrote last year, hospitals are on a buying binge: Doctor practices are being acquired at a rapid clip. While some physicians are choosing to sell their practices to integrated delivery systems that are provider led, the majority of doctors are selling their practices to hospitals. This should have everyone concerned. For one thing, there’s ample evidence that provider productivity declines when doctors become salaried employees of hospitals. (Some selected research, analysis, and commentary of these trends can be found here:A, B, C, D, E, F, G, H) In less urban areas, the hospital and high school can be the largest employers. That leads state and local governments to give them preferential treatment to preserve the jobs associated with them. Dr. Jason Fodeman of the Galen Institute lays out the question. Will doctors working for hospitals lead to lower costs, or higher? The Medicare Payment Advisory Commission (MedPAC) says that the trend toward hospital-employed doctors may drive up costs because care that was once billed as physician visits will be billed at higher hospital outpatient rates—even when they occur in the same location. In addition, many hospitals charge facility fees for visits with doctors in their system. Explicit higher charges for seeing a physician in a hospital are one thing, but the real issue is the incentives doctors employed by hospitals face. As employees, they will be less efficient, subject to the bureaucratic pitfalls present in all organizations. According to Dr. Keith Smith of the Surgery Center of Oklahoma, Medicare and other insurance billing issues involve bigger legal hassles for the self-employed doctor. Self-employed physicians have to comply with Medicare and Medicaid regulations, if they accept those patients, and simply filling out the forms incorrectly can lead to criminal charges. Doctors employed by hospitals don't have that worry: their organization may have to pay a fine, but no one goes to jail. But even if doctors don't take Medicare and Medicaid patients, Obamacare pushes on them more regulations. Medical practices also have the same issues as other small businesses, which are holding back hiring and changing because of the law. As The American Interest notes, despite the Obamacare sales rhetoric of lowered costs, hospital bills will be going up: On the surface, doctors taking on salaried jobs at hospitals might seem like good news for health care costs. One
