Chicago physician segment likely to grow more consolidated in future

Aug 26 2009

HealthLeaders-InterStudy, a leading provider of managed care market intelligence, reports that while the medical community in Chicago is more consolidated than most large cities, with multiple large physician groups affiliated with health systems, the physician segment is likely to grow even more consolidated in the future. According to the recent Chicago Market Overview, with lower patient volumes, a higher percentage of uninsured patients and tighter access to capital, consolidation is likely for local physicians who have already been dealing with stagnant reimbursement from insurers and increased costs such as electronic medical records and malpractice insurance.

"While increased consolidation will provide Chicago physicians with additional resources and better leverage with insurers, it's not all positive for the medical community, particularly for those physicians who value greater independence," said Mark Cherry, analyst with HealthLeaders-InterStudy. "Such consolidation can also be a challenge for pharmaceutical sales representatives because health systems are more likely to require them to make appointments to see physicians."

Hospitals, looking for referral streams and added leverage against health plans, are eager to employ physicians. Additionally, greater consolidation gives health systems an increased ability to streamline clinical practices. One example of this consolidation trend is Chicago's Advocate Health Care's recent acquisition of Midwest Physician Group, a multispecialty practice that previously sent the majority of its patients to St. James Hospital.

"The consolidation among physician groups may be the first step in greater consolidation across the Chicago market, as the healthcare sector will be more aligned with two main segments: health systems and health plans," said Cherry. "Look for tensions between these two segments to increase."

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