Antitrust enforcement in health care--controlling costs, improving quality

Assessing Trends in Hospital System Structures From 2008 to 2015

BACKGROUND

The Affordable Care Act introduced a major systematic change aimed to promote coordination across the care continuum. Yet, it remains unknown the extent to which hospital system structures have changed following the Affordable Care Act. The structure of hospital systems has important implications for the cost, quality, and accessibility of health services.

OBJECTIVES

To assess trends in the structures of hospital systems.

RESEARCH DESIGN

We aggregated data from the American Hospital Association (AHA) Annual Survey to the system level. Using a panel of hospital systems from 2008 to 2015, we assessed trends in the number of hospital systems, their size, ownership characteristics, geospatial arrangements, and integration with outpatient services.

RESULTS

In the period 2008-2015, there was an increasing percentage of hospitals that were system affiliated as well as growth in the number of hospital systems. A greater percentage of hospital systems that were organized as moderately centralized systems transitioned to centralized systems than to decentralized systems (19.8% vs. 4.7%; P<0.001). In terms of geospatial arrangement, a greater percentage of hub-and-spoke systems moved to a regional design than to national systems (20.0% vs. 8.2%; P<0.05). An increasing trend over time toward greater integration with outpatient services was found in a measure of total system level integration with outpatient services.

CONCLUSIONS

Our findings suggest that hospital systems may be moving toward more regional designs. In addition, the trend of increasing integration offered across hospital systems overall, and as portion of total integration, suggests that systems may be increasing their services along the continuum of care.

Affiliation and Its Benefits to the Hospital and Community

As a result of the Affordable Care Act, innovative strategies must be developed and initiated to work with the Affordable Care Act in order to diminish fragmentation of care delivery and thereby improve quality and reduce costs. It is imperative for health care organizations to explore options from mergers and acquisitions to affiliation agreements in order to prepare for business transformation. Since financial strength combined with independent governance and retention of cultural identity may be optimal, a legal transactional structure such as an affiliation is sometimes the best course of action for a health system. This article explores the affiliation process for health care organizations.

Consolidation in the Dialysis Industry, Patient Choice, and Local Market Competition

The Medicare program insures >80% of patients with ESRD in the United States. An emphasis on reducing outpatient dialysis costs has motivated consolidation among dialysis providers, with two for-profit corporations now providing dialysis for >70% of patients. It is unknown whether industry consolidation has affected patients' ability to choose among competing dialysis providers. We identified patients receiving in-center hemodialysis at the start of 2001 and 2011 from the national ESRD registry and ascertained dialysis facility ownership. For each hospital service area, we determined the maximum distance within which 90% of patients traveled to receive dialysis in 2001. We compared the numbers of competing dialysis providers within that same distance between 2001 and 2011. Additionally, we examined the Herfindahl-Hirschman Index, a metric of market concentration ranging from near zero (perfect competition) to one (monopoly) for each hospital service area. Between 2001 and 2011, the number of different uniquely owned competing providers decreased 8%. However, increased facility entry into markets to meet rising demand for care offset the effect of provider consolidation on the number of choices available to patients. The number of dialysis facilities in the United States increased by 54%, and patients experienced an average 10% increase in the number of competing proximate facilities from which they could choose to receive dialysis (P<0.001). Local markets were highly concentrated in both 2001 and 2011 (mean Herfindahl-Hirschman Index =0.46; SD=0.2 for both years), but overall market concentration did not materially change. In summary, a decade of consolidation in the United States dialysis industry did not (on average) limit patient choice or result in more concentrated local markets. However, because dialysis markets remained highly concentrated, it will be important to understand whether market competition affects prices paid by private insurers, access to dialysis care, quality of care, and associated health outcomes.

Bundled Payments in Cardiac Surgery: Is Risk Adjustment Sufficient to Make It Feasible?

BACKGROUND

Policymakers have proposed risk-adjusted bundled payment as the single most promising method of linking reimbursement to value rather than to quantity of service. Our objective was to assess the relationship between risk and cost to develop a model for forecasting the costs of cardiac operations under a bundled payment scheme.

METHODS

All patients undergoing adult cardiac operations for which there was a Society of Thoracic Surgeons (STS) risk score over a 5-year period (2008 to 2013) at a tertiary care, university hospital were reviewed. Patients were stratified into five groups based on preoperative risk as a basis for negotiating risk-adjusted bundles. A multivariable regression model was developed to analyze the relationship between risk and log-transformed costs. Monte Carlo simulation was performed to validate the model by comparing predicted with actual fiscal year 2013 costs.

RESULTS

Among the 2,514 patients analyzed, preoperative risk was strongly correlated with costs (p < 0.001) but was able to explain only 28% (R(2) = 0.28) of the variation in costs between individual patients. The use of bundling to diffuse and adjust for risk improved prediction to only 33% (R(2) = 0.33). Actual costs in 2013 were $21.6M compared with predicted costs of $19.3M (±$350K), which is well outside the forecast's 95% confidence interval.

CONCLUSIONS

Even among the most routine cardiac operations and with use of the most widely validated surgical risk score available, much of the variation in costs cannot be explained by preoperative risk or surgeon. Consequently, policymakers should reexamine whether individual practices or insurers are best suited to manage the residual financial risk.