The 'alarming' trend of payers acquiring physicians

Payers such as UnitedHealth Groups' Optum and Elevance are acquiring providers, and some leaders are wary about how these groups' rapid growth will affect the physician workforce. 

Udaya Padakandla, MD, president of the Texas Society of Anesthesiologists, joined Becker's to discuss why this trend is concerning him and what he feels need to change. 

Editor's note: This interview was edited lightly for clarity and length. 

Question: What trends regarding physician payments are concerning you?

Dr. Udaya Padakandla: A bothersome trend we're seeing is the insurance companies, such as Optum, acquiring physician practices. This is producing a conflict of interest; they're trying to undercut physician payments, but they're also acquiring their practices. They're both the payers and the payees in the insurance equation. I'm not sure they have the interest of the patients or the physicians at the heart of the matter, because insurance companies are always focused on their profits. The primary purpose of any company and board of directors is to make sure that the company gets profit. Everything else is besides the point. If you're interested in improving patient healthcare, you may do so outside the purview of the company board as a compassionate act or as a philanthropic act. (True quote from the late Milton Friedman). That's true of any capitalist enterprise. In the case of healthcare, that's very brazen, and that's very wrong. Patient care becomes severely compromised. Additionally, physicians will go out of practice if you drive down their payments too far for too long. Eventually, they will all quit. That's unsustainable, because the patients are left without the proper physicians and proper providers to take care of them. It happens a lot in rural areas because physicians will leave the practices because the payers don't pay well. Physician payment needs to be kept at a level that keeps them taking care of the patients.

Q: What needs to change to stop this trend?

UP: We need to put a halt on vertical integration. Back in the '70s and '80s, we had something called corporate practice of medicine that was banned — the idea is that hospitals cannot be employing physicians, because then they will get to their bottom line rather than focus on the patients' best interests. Physicians need to be free from interference from the hospitals that provide the facilities for patient care. The language was specific in excluding only the hospitals from such practices.

In the process, the legislators never mentioned insurance companies as one of the entities that could engage in the corporate practice of medicine. So now, the insurance companies have found after the Affordable Care Act that they can engage in all of that without much interference or scrutiny from the federal government. Optum, Aetna, Cigna, Humana, Blue Cross Blue Shield — they all are acquiring physician practices at an alarming rate. Around 10% of today's physicians workforce is now affiliated with just one insurer. The vertical integration needs to be taken down altogether. If we cannot outlaw it, we at least need to bring it under regulation so the physicians will have the freedom to practice on their own without being dictated to by either hospitals or the insurance companies.

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