The system is also rigged against cost-savings from small providers. My wife is an ophthalmologist in private practice. Recently, we were looking at the econo

The system is also rigged against cost-savings from small providers. My wife is an ophthalmologist in private practice. Recently, we were looking at the economics of buying a laser to do a common treatment for patients with glaucoma, called a Selective Laser Trabeculoplasty (SLT). Even with a decent understanding of medical reimbursement models in the United States, I was still kind of shocked by what I found. The laser to perform the procedure costs about $30,000 to purchase. The Medicare allowable for a physician performing the procedure in a standalone surgery center is about $315. There's really no reason that the procedure needs to be performed in a surgery center, and Medicare does let the physician bill about $30 more if they bought a laser for their office, and performed the procedure there. But, at an increase of $30/procedure, you'd have to be doing a ton of SLTs to make buying your own laser financially attractive vs. just using the local surgery center's. Where things get crazy, is in terms of facility fees. If a physician performs an SLT procedure at an ambulatory surgery center, the physician's medicare allowable is about $315, and the surgery center can bill a separate facility fee of about $290, making the total procedure cost medicare just over $600. If my wife's practice were bought by a hospital tomorrow, and they brought an SLT into her office, every time she performed an SLT in the exact same office that was now hospital owned, they'd be able to bill the $315 physician fee, plus a "hospital outpatient department" (HOPD) facility fee of $443, bringing the total cost of the procedure to over $750. So, to recap the total costs to medicare: Physician does the procedure in their privately owned medical practice: $345 Physician does the procedure in a surgery center: $600 Physician does the procedure in a hospital-owned medical practice: $750 You want to know why independent medical providers are getting bought up by hospitals and large health systems at an alarming rate? That's why. Because for doing the exact same thing, they get paid by medicare and private insurance companies (whose rates are largely based off of medicare reimbursement rates) 2x what a provider can on their own. You hear a lot in the healthcare market about the efficiencies of scale, and how large integrated healthcare organizations are doing amazing things. You don't hear a lot about the potential for independent practitioners to reduce costs, but it's absolutely there, and largely ignored. That said, medicare is (or at least was under the ACA) moving toward a "pay for performance" model, where instead of getting paid more for doing more angiograms, cardiologists will get paid more for keeping their patients from needing angiograms in the first place. There are still plenty of issues, but I think broadly that's the right direction for healthcare reimbursement to be going.