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Dr. Thomas Lewandowski, a Wisconsin cardiologist, had a tough choice to make in 2010 after the federal government yet again reduced the payments he received for treating Medicare patients: He could fire half his staff to keep his practice open, or sell it to a local hospital. He sold

Under Medicare’s tangled payment system, hospitals get higher reimbursements than individual doctors for cardiology treatment and other specialty services—in some cases a lot higher.

Large hospital chains also have more power than individual doctors to negotiate reimbursements from insurers such as UnitedHealth Group (UNH) and WellPoint (WLP).
The result: Instead of controlling costs by keeping payments to doctors down, the federal government may be driving them higher.

This reminds me of another one the US federal gov't attempt in health care economics. The gov't ramped up the number of medical schools. Between 1960 & 1980 the number medical school graduates doubled annually. This was an attempt to drive down fees due to competition thus reducing overall costs. Didn't work. Some existing doctors & medical school graduates became specialists & thus could charge more. Other doctors simply provided more health care to their existing patient base. The result: an increase in total health care cost for the medicare program.

I learned the above story in Shannon Brownee's book: "Overtreated".
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