Hospital-Owned Physician Organizations Incur Higher Costs

Hospital-owned physician organizations had higher expenditures for professional, hospital, laboratory, pharmaceutical, and ancillary services for patients in commercial HMOs compared to for patients in physician-owned organizations. The study, published in the Journal of the American Medical Assn., was conducted from 2009 to 2012. Organizations owned by multi-hospital systems incurred 19.8% higher expenditures compated to physician-owned organizations. The largest physician organizations incurred 9.2% higher expenditures per patient than did the smallest organizations. Hospitals are rapidly acquiring medical groups and physician practices. This consolidation could foster cooperation and reduce expenditures. But it could also lead to higher expenditures through greater use of hospital-based ambulatory services and that fact that hospitals will have more pricing leverage against health insurers. Local hospital–owned physician organizations incurred 10.3% higher expenditures per patient than did physician-owned organizations. For more information, visit

Last Updated 10/20/2021

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