Hospitals are increasingly acquiring doctors’ offices, leading to higher prices for patients — even if they never visit a hospital. 

The practice introduces what is known as a “hospital facility fee,” an additional charge that hospitals can include in bills from doctors’ offices, outpatient surgical clinics and diagnostic centers they own. These facilities are rebranded as “outpatient hospital departments,” even when they are miles away from the main hospital campus.

“It’s one of the most egregious examples of hospital financing at the expense of consumers,” said Liz Hagan, director of policy solutions at the United States of Care, a non-profit advocacy group that released a report on the practice, according to The Guardian.

Ms. Hagan said that consumers ultimately bear the cost through higher insurance premiums or direct service fees, as hospital costs are incorporated into premium calculations. Facility fees originate from the historical billing practices of hospitals, where bills are divided into “professional fees” charged by doctors and “facility fees” charged by institutions.

Trade groups like the American Hospital Association (AHA) have opposed efforts to curb facility fees. The AHA argues that the costs of hospital care include maintaining readiness for traumatic events and providing 24/7 emergency care, regardless of a patient’s ability to pay or insurance status. 

They claim that prohibiting facility fees would result in significant and unprecedented cuts to hospital funding. Additionally, the AHA points out that private equity firms, rather than hospitals, are purchasing most physician groups.

Data from KFF indicates that as of 2022, 41% of doctors’ offices are affiliated with hospitals, up from 29% in 2012. 

Further studies using data from private insurers have found that 10% of physician practices were acquired over a six-year period from 2006 to 2013, with hospital mergers leading to an average price increase of 14.1%, the Guardian reported.

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