MOUNTAIN VIEW, Calif. _ When Dr. Sarah Azad followed her mother into the field of obstetrics eight years ago, she thought she'd be in private practice for the rest of her career. At the time, independent practices abounded in Silicon Valley.
"From the time we were young, my mom's patients loved her. She was a part of their lives. That's just always how I've seen medical care," she said.
But over the past decade, she's watched as doctor after doctor sold their practice and went to work for one of the large hospital systems in town. Today, Azad runs one of the last remaining independent OB-GYN practices in Mountain View.
The number of physician practices employed by hospitals increased by 86 percent from 2012 to 2015, according to a study conducted by Avalere Health for the Physicians Advocacy Institute, a health policy-focused nonprofit.
Perhaps nowhere has the trend been more pronounced than in Northern California.
As large hospital systems like Sutter Health, Stanford Medicine and UCSF Medical Center gobble up doctor practices, they gain market muscle that pushes costs upward. It's a key reason why Northern California is now the most expensive place in the country to have a baby.
A study published last week in Health Affairs found that large doctor practices, many owned by hospitals, exceed federal guidelines for market concentration in more than a fifth of the areas studied. But the mergers are typically far too small for federal antitrust authorities to notice.
"When you have less competition, prices go up," said Martin Gaynor, a health care economist at Carnegie Mellon University. "If you're an insurance company and you don't reach an agreement with Sutter, then you have a hard time offering an attractive insurance product because it's so big and pervasive. So you don't have the same negotiating power, and Sutter can extract higher prices."
In the San Francisco Bay Area, the reimbursement rate for a vaginal delivery is two to four times higher for physicians who work for large hospital systems than for those who are independent, according to a Kaiser Health News analysis. The news organization examined claims data provided by Amino, a health cost transparency company, plus results from medical cost calculators available from certain employers to help workers comparison shop.
The extra money for physician services goes to the hospital system, and doctors, now on salary, might take home no more than before. Although switching from independent practice spares OB-GYNs the considerable hassles of negotiating with insurers and running an office, doctors say the lion's share of the benefit goes to hospital systems _ not to physicians or patients.
In Northern California, Sutter, Stanford and UCSF all mentioned quality as a reason why their physician prices are higher, and it might seem intuitive that integrating care among disparate physicians leads to better care.
"Sutter Health-affiliated doctor groups consistently rank among California's highest performers," Dr. Jeffrey Burnich, senior vice president at Sutter Health Medical and Market Networks, wrote in an email. In the long run, "by improving care quality and efficiency, we reduce costs."
But in general, research suggests bigger is not necessarily better.
Fewer patients of small physician-owned practices, for example, are admitted to the hospital for preventable conditions than those of large hospital-owned practices, according to a 2014 study published in Health Affairs. A report from the National Academy of Social Insurance showed that the integrated delivery networks of large hospital systems have raised physician costs without evidence of higher quality. And a recent paper, also published in Health Affairs, found that high-price physician practices, which cost at least 36 percent above average, had no better quality than low-cost practices.
"All of the evidence that we see shows that the quality in these larger systems is the same or worse," said Kristof Stremikis, associate director for policy at the Pacific Business Group on Health, which represents employers that provide health insurance.
