Insurers buying up physician groups to control costs

In their latest move to protect their profits, health plans and even Wall Street investors have entered the fray of the physician-buying spree already kicked off by hospitals, Kaiser Health News (KHN) reports. Leading the trend is UnitedHealth Group, which has been quietly buying medical groups and launching physician management groups throughout the country. In the interest of controlling costs by managing doctors directly, other large insurers, including Humana and WellPoint, have indicated they also will follow suit.

The strategy is simple: "The doctors, at the end of the day, control the patients, and currently they're financially incentivized to do more tests, more procedures," Chris Rigg, a Wall Street analyst for Susquehanna Financial Group, told KHN. "But, if they're employed by a managed care company, they're financially incentivized" to do less.

As a result, "Many patients insured by these companies are going to see much tighter management of their care," KHN reports.

With the health law top of mind, companies such as United are also looking to position themselves as leaders of emerging accountable care organizations (ACOs) by driving physicians to provide cheaper, more efficient care.

"For several years, hospitals have been buying up doctor groups because it helped them demand greater prices from insurers," Gerry Meklaus, an adviser to hospitals and physician groups for FTI Consulting, told NPR. "But now, [insurers are] also trying to make their services cheaper and for that, they also ‘need physicians,'" he said.

For others, scooping up cost-savvy physicians represents less of a need, but an opportunity. For example, OptumHealth, an arm of UnitedHealth Group, plans to sell the services of its more efficient physicians on the open market, potentially to rival health plans, NPR reports. Wall Street investors have also reported a "renewed interest" in physicians who can manage the financial risk of caring for patients, according to the post.

To learn more:
- read the article from Kaiser Health News
- see the post from NPR

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