Heads Up: Insurance Companies Buying Out Private Practices

Hospitals and insurance companies have long been in a tug of war over which can purchase more physician owned practices than the other. While hospitals have consistently stayed the frontrunner, their ability to buy up practices at a much faster pace certainly hasn’t stopped insurers from trying to tip the scales in their favor. In 2017 alone, insurance companies purchased hundreds of physician owned practices and, over the course of the last several years, nearly every big name insurance giant has entered into a multi-billion dollar deal to acquire a well-known healthcare company, like Aetna’s acquisition of CVS for $69 billion.

When an insurance company takes over a physician practice as opposed to a hospital, it obviously gives the insurance company an opportunity to control costs but surprisingly, many insurers also see it as a way to have better relationships with patients and improve access for care in underserved areas. While the insurance companies certainly have a lot to gain, what could their role in ownership mean for providers and patients and could we see healthcare change drastically in the near future?

Whether or not working for an insurance owned practice is good or bad for providers depends greatly on the motives behind the insurer and how much control over providers they’re looking to have when they negotiate the terms of their purchases. Some companies are only interested in buying the administrative and back-end operations of practices; which gives the insurer control over collections and management and allows providers to focus all of their attention on patient care instead. This in turn could be a win-win as the insurance company could streamline billing and collect more revenue on behalf of the practice, and providers could alleviate the financial pressures of running their own practice while still having the autonomy aspect.

On the other hand, depending on the terms, the insurance company could potentially dictate how the provider practices, where they refer patients and what prescriptions they write; yet many insurers claim they aren’t looking to employ physicians or to necessarily control them through ownership, but rather to collaborate more closely with them in order to provide better care at lower prices for patients. By working together with physicians, insurers believe a better relationship with patients will be formed which could ultimately help the insurer improve quality and outcomes. In which case, if insurance companies were to treat their physicians and other providers like assets and allow them to still be able to lead, it could mean less burnout of providers, which is beneficial for everyone, including patients.

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Although cost control is a huge factor in why insurance companies are seeking out ownership stakes in physician practices, some companies, like Centene, which purchased a large Florida medical group, see their ownership as a step towards providing high-quality care in places where access is limited. But, in regions where insurers would employ most of the doctors in the area, patient choice could become very limited.

Despite the last few years seeing a rise in the number of insurance owned practices, it’s unlikely that the healthcare industry will see a total ownership take over by insurers. Afterall, from 2015 to 2016, hospitals acquired 5,000 physician owned practices; whereas only about 2% of all physicians were employed directly by health insurers or practices owned by one during the same period.

Would you want to work for an insurance owned practice?


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