Is Physician Integration Driving Up the Cost of Care?

Rene Letourneau, for HealthLeaders Media , July 15, 2013

"The successful entities have to pay the physician leaders for their leadership time and talent and replace the lost clinical time that their management commitments require with additional clinical staff with their own attendant costs," he says. "Leadership time has clear costs, but is not directly associated with a reimbursement stream."

Additionally, reduced physician output can also play a part in higher costs, according to McDermott, who says doctors often suffer "the loss of productivity associated with EHR transition and that associated with feeling less pressure to produce to still be able to pay [their] bills."

Although McDermott sees physician integration as a driver of higher care costs, he sees the benefits, as well.

"I live and work in rural Maine. ... [A]bout 40% of our patients have Medicare and 30% [have] Medicaid. Another 10% don't have insurance… I think that the payer mix is not unique here and reflects much of rural America," he says. "If we did not have the high degree of integration we have in our community, we would have far fewer providers to see the residents of the region, and its health would suffer adversely."

Unlike Angood, however, McDermott isn't so optimistic that the upward cost trend he associates with physician integration is temporary.

"I think that some of these factors are here to stay," he says.

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