Large Medical Groups dictate too many tests, raise prices through roof.

Even before health care reform, consolidation started kicking into high gear. Now it's on steroids, and that's going to cause new problems when it comes to reducing the cost of care. The larger hospitals have been jacking up the price of services because they can. Boston has seen this problem for years. Now markets across the country are experiencing the same problem:

NY Times: A little over half of the 1,400 doctors in southwestern Idaho are employed by St. Luke’s or its smaller competitor, St. Alphonsus Regional Medical Center.

Republicans liked to blame "people" for demanding too many unnecessary tests, but they are intentionally ignoring hospitals and doctors affiliated with clinics. Now doctors are losing part of the action:

Many of the independent doctors complain that both hospitals, but especially St. Luke’s, have too much power over every aspect of the medical pipeline, dictating which tests and procedures to perform, how much to charge and which patients to admit.

In interviews, they said their referrals from doctors now employed by St. Luke’s had dropped sharply, while patients, in many cases, were paying more there for the same level of treatment. St. Alphonsus went to court seeking an injunction to stop St. Luke’s from buying another physician practice group, arguing that the hospital’s dominance in the market was enabling it to drive up prices and to demand exclusive or preferential agreements with insurers. The price of a colonoscopy has quadrupled in some instances, and in other cases St. Luke’s charges nearly three times as much for laboratory work as nearby facilities, according to the St. Alphonsus complaint.

Boise’s experience reflects a growing national trend toward consolidation. Across the country, doctors who sold their practices and signed on as employees have similar criticisms. In lawsuits and interviews, they describe growing pressure to meet the financial goals of their new employers — often by performing unnecessary tests and procedures or by admitting patients who do not need a hospital stay.

As long as we maintain the private free market system, we can expect more of the same. Business models will always morph and adapt to whatever system comes along:

Today, about 39 percent of doctors nationwide are independent, down from 57 percent in 2000, according to estimates by Accenture, a consulting firm ... the consolidation of health care may be coming at a hefty price. By one estimate, under its current reimbursement system, Medicare is paying in excess of a billion dollars a year more for the same services because hospitals, citing higher overall costs, can charge more when the doctors work for them. Laser eye surgery, for example, can cost $738 when performed by a hospital-employed doctor, compared with $389 when done by an unaffiliated doctor, according to national estimates by the independent Congressional panel that oversees Medicare.

According to two emergency room doctors who worked at Carlisle Regional Medical Center in Pennsylvania, the message could not have been clearer: more patients needed to be admitted. After another physician, Dr. Cloyd B. Gatrell, raised concerns that the hospital had too few nurses to keep patients safe, an EmCare executive warned him to “back off,” according to a lawsuit Dr. Gatrell filed last year.

Doctors at numerous hospitals said it was often difficult to criticize the policies instituted by hospitals or investor-owned physician groups because, as employees, they could easily be fired. “We all have families, and we have mortgages,” said an emergency room physician. “If you get fired, it looks bad and it’s hard to get another job.”

The Affordable Care Act was a start, but more will need to done.