Medical Prices Climb When Physicians Consolidate

Many physicians have succumbed to being acquired by a hospital or medical conglomerate, most thinking it would lower their costs and relieve practice headaches, but this just isn’t the case. Tranquilmoney has viable solutions for physicians’ offices short of selling the practice.

(South Orange, NJ) March 12, 2018 —Thinking their costs will go down and the nightmare of insurance billing and collections would be off their plate, many physicians have sold to larger conglomerates or hospital chains. But, researchers found that from 2007 to 2013, almost 10 percent of physician practices in the data were acquired by a hospital. Once acquired, prices for the services provided by those physicians rose an average of 14 percent. (1) Doctors are caught in the middle, as they often sold their private practice due to the complexity of financial management, medical coding, and compliance with regulations. Karun Philip, President and Co-Founder Tranquilmoney, believes physicians can manage their businesses more effectively to avoid consolidating and keep costs down.

Philip says, “The actual practice of medicine has become junior to managing the office. Of all the tasks, billing and collections can consume a lot of the physician’s time. It is Tranquilmoney’s goal to help physicians and their administrators manage their business, leaving them free to care for patients.” A doctor who is trained for eight or more years does not want to spend hours handling a mountain of paperwork and non-medical tasks, which is what much of medicine has become.

In theory, mergers could drive down prices. Overhead might be lower if these groups consolidate medical billing or records departments. Or the now-larger group might be able to negotiate lower prices on medical supplies.

However, that is not what is happening, according to new research from the Kellogg School at Northwestern University. Instead, prices have climbed as more and more healthcare providers have gained market power through mergers and acquisitions. And not much can be done about this.

While these consolidations create powerful healthcare conglomerates in many communities, the piecemeal nature of individual acquisition deals makes them unlikely to attract the attention of antitrust regulators, the research finds. It is only after multiple deals are done that the impact on pricing is felt—and by then, regulators are unlikely to step in. (1)

Medicare, for example, pays one price to independent doctors and another to doctors who work for large health systems — even if they are performing the exact same service in the exact same place. (2)

Market and regulatory factors motivate physicians into practice models that call for greater collaboration and interdependence, sometimes making mergers or even employment within a hospital attractive. (3)

There are financial risks and payer negotiations when a physician considers independence vs. employment. Independent physicians take on more financial risk than employed physicians.

Since contracts with payers have become more complex throughout the past several years, many doctors consider the prospect of negotiating payments for a small practice to be nearly impossible. Sometimes larger nearby healthcare systems are granted preferred provider status. The reimbursement that smaller practices can then negotiate for medical services provides minimal, if any, profit margin with which to run a medical business. (4)

Billing and collections take a large amount of time – doctors usually have at least one person in house devoted to handling this task; or they’ve outsourced this function with varying degrees of success. Tranquilmoney increases the money retrieved by physicians’ practices through collections by 20%. They have expertise in medical billing, including EHR compliance as well as medical practice management.

Dr. Philip says, “The back office support Tranquilmoney provides can relieve the pressure on the physician so he/she can concentrate on practicing medicine and help his patients. That is, after all, what they trained for. The back office technology tools from Tranquilmoney give the independent practicing physician the ability to manage the office, insurance payments, compliance regulations, and medical coding —thereby enabling him to retain his practice.”

About Tranquilmoney:

Tranquilmoney was incorporated in 1995 to provide solutions aimed at reversing the trend of doctors in independent practices feeling at a loss with the increased complexity of the business and regulatory side of the healthcare industry. The pattern of physicians selling their practices to large hospitals is one that is avoidable. Tranquilmoney has the tools in place to provide physician practices with financial management services, such as physician receivables management, pharmacy receivables management, healthcare insurance forms processing, and data capture services. In short, doctors can focus on patient care knowing that their practices are in order. The company is based in South Orange, New Jersey with back office facilities in Chennai, India. Tranquilmoney Inc. operates as a subsidiary of MM Group. For more, please see: http://www.tranquilmoney.com/.



  1. Sachin Waikar. Based on the research of Cory Capps, David Dranove and Christopher Ody, “When Healthcare Providers Consolidate, Medical Bills Rise.” Kellogg Insight, Kellogg School of Management, Northwestern University. 1 Feb. 2018.
  2. Sanger-katz, Margot. “When Hospitals Buy Doctors’ Offices, and Patient Fees Soar.” The New York Times, The New York Times, 6 Feb. 2015.
  3. Robeznieks, Andis. “Physician Interdependence and Independent Practices Can Coexist.”Https://Wire.ama-Assn.org/, AMA Wire, 9 Feb. 2018.
  4. Payesko, Jenna. “Employed vs. Independent Practice as a Physician.” MD Magazine, 6 Feb. 2018.

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