Costs were 5.8 percent higher for patients treated by doctors in hospital- versus physician-owned practices, a new study of physician-hospital integration shows.
When hospitals acquire physician practices or physicians become employed by hospitals costs rise despite little change in care quality, a new study of physician-hospital integration by experts at Rice University and Blue Cross and Blue Shield of Texas (BCBSTX) revealed.
The study recently published in the Journal of General Internal Medicine showed that costs were 5.8 percent, or $280, higher for patients attributed to physicians in hospital-owned versus physician-owned practices from 2014 to 2015.
Yet, hospital-owned practices were better than their physician-owned peers for only one of the five quality measures analyzed, researchers found after examining all preferred provider organization (PPO) insurance claims processed for care through BCBSTX from 2014 through 2016 in Texas’ four largest metropolitan areas — Dallas, Houston, San Antonio, and Austin.
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“When we launched this study, we hypothesized that tighter integration of physicians with hospitals would improve care coordination,” Vivian Ho, lead author and the James A. Baker III Institute Chair in Health Economics and director of the Center for Health and Biosciences at Rice’s Baker Institute for Public Policy, stated in a press release. “For example, less duplicate testing might occur, which would lower costs. That hypothesis didn’t play out in the data.”
Physician-hospital integration is on the rise. Hospital acquisitions of physician practices increased by 128 percent from 2012 to 2018, bringing the number of hospital-owned practices up from 35,7000 to approximately 80,000 by the end of the period, Avalere Health and the Physicians Advocacy Institute (PAI) recently reported.
As hospitals and physician practices became closer through vertical integration, the number of doctors directly employed by hospitals also increased by more than 70 percent during the five-year period, the two organizations found.
Hospital employment has only increased since then, too. In fact, the American Medical Association (AMA) recently found in 2019 that the number of employed physicians exceeded the number of self-employed doctors for the first time in US history.
Physicians are responding to transformational changes in the industry, such as value-based care, which requires greater care coordination and better control over physician and hospital expenses, explained former AMA president Barbara L. McAneny, MD.
However, care coordination may not be happening under physician-hospital integration, researchers from Rice and BCBSTX found. Their study showed that patients attributed to physicians in hospital-owned practices had greater resource use compared to patients treated by doctors in physician-owned practices.
Specifically, spending on imaging and durable medical equipment for patients treated by hospital-owned practices was about 13 percent higher, respectively, and spending on unclassified services (i.e. operating and recovery room claims) was 21 percent higher, the study showed.
Additionally, when spending was separated by site and type of care, researchers found that patients treated by physicians in hospital-owned practices had nearly 22 percent greater outpatient facility expenditures relative to patients seen by doctors in physician-owned practices.
The findings suggest that utilization rather than price variation is behind the rising costs associated with physician-hospital integration, researchers explained. As hospitals gain more control over physicians in their community, the facilities may be incenting the delivery of more services instead of higher quality care, they stated.
“Healthcare costs continue to rise faster than the growth rate of the overall economy,” said Ho, who is also a professor of economics at Rice and a professor of medicine at Baylor College of Medicine. “Tighter integration of physicians with hospitals appears to be contributing to that cost growth, with no evidence of better quality.”
This could spell trouble for value-based care and other healthcare reforms, added Leanne Metcalfe, executive director of research and strategy at BCBSTX and a co-author of the study.
“Centers for Medicare and Medicaid Services regulators should be wary of the burden that increasing reporting requirements place on physicians in small, independent practices,” she said. “In the long run, these requirements may have the unintended consequence of raising health care costs.”
Date: September 20, 2019
Source: RevCycleIntelligence