And since when is this practice wrong? for fucks sake...making a profit is not criminal.
First off, you said brought up over-charging. Is that right or wrong? Are you saying it is OK to overcharge to make a profit?
And second, given that this isn't a freemarket, is it OK for physicians to cherrypick patients to maximize their profit?
If I open a business, say a restaurant, I expect to make a profit. If I can't, I go bankrupt and close. Now, I can't make people eat at my restaurant, I have to compete against other restaurants. I have to compete.
Now with these phyisican practices, they want a bigger profit. So they read the medicare/HMO reimbursement guidelines and cherrypick what pays good (and that they can perform), and open a clinic/hospital. They can screen their patients, and people that will make money (IOW, good insurance, or healthy patients that won't have complications) go to their clinic. The really sick or poorly-insured go to the regular hospital. And the neat trick is, they still make money for the procedure they do (unless the patient totally doesn't have insurance). They still get a check from medicare/HMO/etc for their procedure. Where is the competition?
There are usually at least two fees for procedures. There is a physician component for services they provide, say a cath or surgical procedure, and then there is the hospital component, for the providing the OR, supplies, nursing staff, recovery time in hospital, etc.
For some diagnosis codes, hospitals lose money. For some, they make money. Hospitals don't have a say in this. (that's really fair, don't you think?) Overall, they have to make money to survive.
Now comes Dr X, who sees that doing surgery Y pays not only a good physician charge, but a good hospital component. So Dr X opens his own place so he can get both payments. And what happens to the hospital? They have less profitable procedures, and thus make less (or no) money.
And if surgery Y gets it reimbursement cut (it happens)? Dr X closes his clinic, and moves it back to the hospital. Dr X still gets his physician fee for service, and the hospital gets another money-losing patient.
And I am not even mentioning how they can further manipulate the process, where even if surgery Y pays well, if a very-sick patient comes along, and the physician feels that he is likely going to have a long hospital stay because of risk factors/complications, the physician dumps the patient to the hospital, to eat the cost of the prolonged hospital stay, while he still gets his fee for service.
So you can see, in the real world, there is already plenty of abuse by physicians for gaming the system. It certainly isn't all the hospitals fault. In fact, in a lot of cases, the hospital is hostage to its physicians since they decide who gets admitted and what gets done.Of course, this is only one little facet of all the problems healthcare in this country has, and no system will be perfect anyway. But that doesn't change the fact that many things are wrong.
But because of seeing this happen all the time in real life, like I said, I won't lose sleep if a few physician groups don't open their own clinics to game the system.