340B Spotlight: Trends in shifting site of care

Research has shown once health care services shift from a provider’s office to a hospital, treatment costs for payers and patients increase. One way hospitals drive this site of care shift is through the purchase or acquisition of independent physician practices. This is an increasingly popular trend among 340B hospitals, in part because they are able to maximize reimbursement from payers to gain additional revenue through 340B discounts by reclassifying the physician practices as hospital outpatient sites. This trend has been a factor in leading to exponential 340B program growth, as well as more expensive treatment costs.

A new study out recently from Avalere and the Physicians Advocacy Institute looks at trends in health and hospital system acquisition of physician practices. Across the country, from 2012 to 2015, hospital ownership of physician practices increased by 86 percent, and growth was largest in the Northeast and the South where ownership doubled. To date, one in four physician practices is owned by a hospital compared to one in seven in 2012. In the Midwest, more than one in three physician practices are hospital owned. The study notes that this trend impacts patient care and cost sharing and may increase overall system costs. 

Provider consolidation has already reshaped many hospital systems and expanded their reach to types of care that were traditionally provided by community-based physicians. It is time for policymakers to reform 340B program eligibility for hospitals and child sites to be consistent with Congress’ original intent for the 340B program, which was designed to support care provided in true safety-net hospitals.