For example, the report's authors indicate hospital profit margins are higher for outpatient services than inpatient services for commercially insured patients, but the inverse is actually true for Medicare margins. However, hospitals are acquiring physician practices and other outpatient facilities — and perhaps converting them into hospital outpatient departments — because hospitals receive "significantly higher reimbursement" for most outpatient services.
For example, a recent report from the Medicare Payment Advisory Commission found that Medicare payments rates for surgeries are 74 percent higher in HOPDs than in ambulatory surgery centers, according to the article.
The authors concluded this continued consolidation of providers will give a select few a market stranglehold on hospital inpatient, outpatient diagnostic imaging and laboratory services, which "are likely to lead to a spike in healthcare inflation," according to the report.
"Market consolidation does not imply a more efficient and effective care delivery system," the authors wrote. "Higher operating profits to major hospital systems will only beckon the need for capitation and the transfer of financial risk to providers. The time for implementation of fundamental [strategic] change in care delivery is now."