HCA Holdings Inc (HCA), Health Management Associates Inc (HMA): Obamacare Shoving Doctors Out of Private Practice

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Hospitals aren’t the only organizations scooping up physicians. Major insurers have also gotten into the act as they adapt to the new health care landscape created by Obamacare.

In 2011, UnitedHealth Group Inc.(NYSE:UNH) bought Monarch Health Group, a large physician group in Southern California. UnitedHealth Group Inc.(NYSE:UNH)’s Optum business segment previously purchased two smaller physician groups in the region — AppleCare Medical Group and Memorial HealthCare Independent Practice Association.

Humana Inc (NYSE:HUM) acquired Metropolitan Health last year. Metropolitan Health operates a network of physicians and other clinical professionals who focus on providing care for Medicare beneficiaries. Humana Inc (NYSE:HUM) also bought Concentra, with its 300 health clinics spread across 40 states, in 2010.

No-good goodbye?
Will this trend of doctors saying goodbye to their private practices be a good thing? Not necessarily.

According to one estimate, Medicare pays more than $1 billion per year than it would otherwise when doctors work for hospitals. That’s largely because hospitals receive higher reimbursements from the government program for many specialty services than individual doctors would.

Another potential issue stems from the possibility that hospitals could push doctors in their employment to pump up numbers of admissions and tests. Health Management Associates Inc (NYSE:HMA) is under investigation in several states for possible actions including the “medical necessity of emergency room tests and patient admissions.” A 60 Minutes story in December focused on some of these alleged admissions issues. The company disputes these accusations.

Of course, if you own stock of hospitals that are hiring away physicians from private practices, the trend is probably quite welcome. In large part due to the impact of Obamacare, hospital stocks have soared. HCA Holdings Inc (NYSE:HCA) shares are up more than 60% over the last year. Health Management Associates Inc (NYSE:HMA) stock gained more than 130% during the same period.

The way of the dinosaur and dodo?
Physician private practices will almost certainly continue to decline, but they probably aren’t headed for total extinction. Some doctors will resist the temptation to work for larger entities, even if their pay suffers as a result.

While the shift away from private practices was already under way prior to Obamacare, the legislation definitely threw gasoline on the fire. As a result, perhaps another federal action is now needed: adding physician private practices to the endangered species list.

The article Obamacare Shoving Doctors Out of Private Practice originally appeared on Fool.com is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group.

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