David Laxson, a heart doctor, used to be part of one of the last remaining private cardiology practices in Minnesota.

Three years ago, Laxson still worked with a group of 20 other cardiologists who formed a practice independent of hospitals.

Now, Laxson works for a cardiology center connected to the University of Minnesota Medical Center after the 20 cardiologists dismantled the clinic because of Medicare funding cuts for cardiology that started in 2008.

The group struggled to come to the decision to sell their practice off in pieces to regional medical centers.


Dr. David Laxson left an independent cardiology practice to work with a bigger group affiliated with the University of Minnesota Medical Center. (Courtesy/UMN)

There was lots of discussion and soul searching, Laxson said. It was not easy.

After two years of extremely detailed negotiations, his group sold their assets and joined hospitals untouched by the funding cuts.

It was a very difficult process, but we could see that we were not going to be able to keep up with new technology, he said.

Heart doctors like Laxson across the U.S. are closing up independent practices and migrating to large medical centers, forcing patients to travel farther and pay more for their care. The trend began in 2008 after Medicare slashed reimbursements to cardiologists for common imaging procedures, prompting some private insurers to follow suit, experts say.

Independent cardiologists relied on money they earned by performing common imaging tests to remain competitive with large medical centers. The amount Medicare pays to reimburse for imaging tests adds up to about 10 percent of annual revenue from independent cardiology groups .

Cardiologists continue to flock to hospitals at major medical centers, where salaries remain high and Medicare reimbursements for imaging procedures are triple those from outpatient independent cardiologists, according to Jack Lewin, CEO of the American College of Cardiology.

In the cardiovascular sector, they've already done the damage, Lewin said, referring to the hospital bias of Medicare's new fees. They're using blunt tools of cutting costs, and what we can show you is price controls aren't working.

Imaging reimbursement rates at hospitals are three times more than at independent cardiologists, a cost discrepancy that hits patient pocketbooks hard, experts argue. For example, an echocardiogram currently costs about $250 to perform in an outpatient clinic compared to $750 in a hospital.

Triple the reimbursement for hospitals amounts to triple the co-pay for patients. Lewin said hospitals have a big political advantage over independent cardiologists because most members of Congress have a hospital in their districts, and hospitals are often major campaign contributors.

Medicare fees that favor hospitals cost the overall medical system more, Lewin said. The American College of Cardiology favors rewarding physicians for successful treatment outcomes, an approach where physicians would follow evidence-based treatment protocols. The protocol would require doctors may have to order more tests for some patients, Lewin said, but overall doctors would conduct fewer tests with the evidence-based approach.

If Congress wants to get smart, they will use this new approach, Lewin said.

The ACC is not against the migration of cardiologists into major medical centers, but Lewin said patients will have the best outcomes in physician-led organizations, such as Cleveland Medical Center, Johns Hopkins and Mayo Clinic.

The migration became inevitable when Medicare slashed outpatient reimbursement rates for imaging. Since 2010, over half of the private practice cardiologists have sold their practices to be employed by hospitals, and the migration continues, Lewin wrote in an email.

This shows you that the business models of some of these practices are very vulnerable to relatively few changes in health policy, said Daniel Zismer, an associate professor of health policy and management and director of graduate programs in health care administration at the University of Minnesota. Zismer spent 15 years in health care mergers and acquisitions before entering academia.

Zismer said cardiology groups tend to serve older patients, who are more vulnerable to the effects of sweeping consolidation of cardiology practices from Medicare policy changes.

Having [the patients] come to a centralized place could actually be less efficient for the patient, said Andrew Brotman, chief clinical officer at New York University's Langone Medical Center. This is the conundrum that we face in all of health care - patient centeredness.


Medicare pays hospitals triple what it pays outpatient cardiology groups for imaging procedures. (Courtesy/American College of Cardiology)

The Langone Medical Center received many cardiologists and other specialists who migrated away from smaller practices. NYU has over 900 employed physicians, he said, whereas five years ago that number was 600.

I think this is pushing toward large groups, large medical centers, and away from smaller practices, Brotman said of Medicare's rapidly changing reimbursements.

Laxson, speaking from his office at the University of Minnesota Medical Center, said the former group of cardiologists would have weathered a decrease of 10 percent in revenue if they had chosen to remain independent - that money would have come out of their annual salary.

Working for a major medical center has advantages along with disadvantages, Laxson said. He said most cardiologists will be able to deliver the same quality of patient care in the hospital setting as they did as independent practitioners, but he acknowledges that the pressure to do more with less as budgets shrink could have an impact on the profession.

It's not destined to get worse, but it's not impossible either, Laxson said. I fully expect everybody's going to see the stressors, eventually.