Price Effects Of Vertical Integration And Joint Contracting Between Physicians And Hospitals In Massachusetts

Does vertical integration increase the costs for primary care inpatients? Evidence from a national pilot programme in China

OBJECTIVE

To assess the impact of vertical integration (VI) within County-Level Integrated Health Organisations (CIHOs) on the costs of primary care inpatients.

METHODS

This study assessed Xishui, a national pilot county for CIHOs, using inpatient claims data. The treatment group comprised 10,118 inpatients from 5 vertically integrated township health centres (THCs), while the control group consisted of 21,165 inpatients from 19 non-vertically integrated THCs. The periods from July 2020 to December 2021 and January 2022 to December 2022 were defined as pre- and post-policy intervention, respectively. The primary outcome variables were total health expenditures (THS), out-of-pocket (OOP) expenditures, and the proportion of OOP expenditures. Propensity score matching was employed to align inpatient demographics and disease characteristics between the groups, followed by a difference-in-differences analysis to evaluate the outcomes.

FINDINGS

VI significantly increased THS (β = 0.1337, p < 0.01) and OOP expenditures per case (β = 0.1661, p < 0.001), but the increase in the proportion of OOP expenditures per case was not significant (β = 0.0029, p > 0.05). For the basic medical insurance for urban and rural residents, THS per case (β = 0.1343, p < 0.01) and OOP expenditures (β = 0.1714, p < 0.001) significantly increased. For the basic medical insurance system for employees, THS per case also increased significantly (β = 0.1238, p < 0.01), but the change in OOP expenditure proportion per case was not significant (β = 0.1020, p > 0.05). The THS per case led by Xishui County People's Hospital, the leading county medical sub-centre (CMSC), significantly increased (β = 0.1753, p < 0.01), whereas the increase led by Xishui County Traditional Chinese Medicine Hospital was not significant (β = 0.0742, p > 0.05). Increases in OOP expenditures per case were significant in CMSCs led by the People's Hospital and the Traditional Chinese Medicine Hospital (β = 0.1782, p < 0.01 and β = 0.0757, p < 0.05, respectively).

CONCLUSION

VI significantly increased THS and OOP expenditures for primary care inpatients. However, VI could exacerbate economic disparities in disease burden across different insurance categories.

Quality-of-Care Outcomes in Vertical Relationships Between Physicians and Health Systems

Importance

Vertical relationships (ownership, affiliations, joint contracting) between physicians and health systems are increasing in the US. Many proponents of vertical relationships argue that increased spending associated with consolidation is accompanied by improvements in quality of care.

Objective

To assess the association of vertical relationships between primary care physicians (PCPs) and large health systems and quality of care.

Design, Setting, and Participants

This stacked difference-in-differences study compared outcomes for patients whose attributed PCP entered a vertical relationship with a large system in 2015 or 2017 to patients whose PCP was either never or always in a vertical relationship with a large system from 2013 to 2017. Models account for differences between PCPs, patient characteristics, market concentration, and secular trends. Data were derived from the 2013 to 2017 Massachusetts All-Payer Claims Database. The study population included commercially insured individuals attributed to a PCP in the Massachusetts Health Quality Partners' Massachusetts Provider Database in 2013, 2015, or 2017. Analyses were conducted between January 2021 and January 2024.

Exposure

PCPs attributed to patients in the study entering a vertical relationship with a large health system in 2015 or 2017.

Main Outcomes and Measures

Low-value care utilization, posthospitalization follow-up, utilization among patients with ambulatory care-sensitive conditions, practice site visit fragmentation, and timeliness of specialty care.

Results

The study population included 4 603 172 patient-year observations from 2013 to 2017. Among all patients in the study, 53.5% were female, 35.3% had any chronic condition, and the mean (SD) age was 38.9 (20.3) years. There was no association between vertical relationships and low-value care or ambulatory care-sensitive conditions utilization. A patient's PCP entering a vertical relationship had no association with the probability of follow-up within 90 days of cancer diagnosis with any oncologist but was associated with a 7.34-percentage point (pp) (95% CI, 2.28-12.40; P = .01) increase in the probability of follow-up with an oncologist in the health system. Vertical relationships were associated with increased posthospitalization follow-up with a physician in the health system by 7.51 pp (95% CI, 2.96-12.06: P = .001) in the 2015 subgroup. PCP-health system vertical relationships were associated with a significant decrease in fragmentation of practice site visits of -1.05 pp (95% CI, -2.05 to 0.05; P = .04).

Conclusions and Relevance

In this study, vertical relationships between PCPs and large health systems were associated with patient steering and changes in care delivery processes, but not necessarily improvements in patient outcomes.

Variation in tiered network health plan penetration and local provider market characteristics

OBJECTIVE

To understand variation in enrollment in tiered network health plans (TNPs) and the local provider market characteristics associated with TNP penetration.

DATA SOURCES AND STUDY SETTING

We used 2013-2017 Massachusetts three-digit ZIP code level employer-sponsored health insurance enrollment data, data on physician horizontal and vertical affiliations from the Massachusetts Provider Database, state hospital reports in 2013, 2015, and 2017, and the 2013-2017 Massachusetts All-Payer Claims database.

STUDY DESIGN

Linear regressions were used to estimate associations between TNP and local provider market characteristics.

DATA EXTRACTION

We constructed measures of TNP penetration and local provider market characteristics and linked these data using three-digit ZIP code.

PRINCIPAL FINDINGS

TNP penetration was at least 10% in all employer market sectors and highest among jumbo sized employers. All state employee health plan enrollees were in a tiered network health plan. Among enrollees not in the state employee health plan, TNP penetration varied from 6.0% to 19.6% across three-digit ZIP codes in Massachusetts. TNP penetration was higher in areas with less horizontal and vertical physician market concentration.

CONCLUSIONS

Market competition, rather than the absolute quantity of physicians in an area, is associated with TNP penetration.

Cost, Quality, and Utilization After Hospital-Physician and Hospital-Post Acute Care Vertical Integration: A Systematic Review

Vertical integration of health systems-the common ownership of different aspects of the health care system-continues to occur at increasing rates in the United States. This systematic review synthesizes recent evidence examining the association between two types of vertical integration-hospital-physician (n = 43 studies) and hospital-post-acute care (PAC; n = 10 studies)-and cost, quality, and health services utilization. Hospital-physician integration is associated with higher health care costs, but the effect on quality and health services utilization remains unclear. The effect of hospital-PAC integration on these three outcomes is ambiguous, particularly when focusing on hospital-SNF integration. These findings should raise some concern among policymakers about the trajectory of affordable, high-quality health care in the presence of increasing hospital-physician vertical integration but perhaps not hospital-PAC integration.

Decomposition of medical imaging spending growth between 2010 and 2021 in the US employer-insured population

Medical imaging, identified as a potential driver of unsustainable US health care spending growth, was subject to policies to reduce prices and use in low-value settings. Meanwhile, the Affordable Care Act increased access to preventive services-many involving imaging-for employer-sponsored insurance (ESI) beneficiaries. We used a large insurance claims database to examine imaging spending trends in the ESI population between 2010 and 2021-a period of considerable policy and benefits changes. Nominal spending on imaging increased 35.9% between 2010 and 2021, but as a share of total health care spending fell from 10.5% to 8.9%. The 22.5% growth of nominal imaging prices was below inflation, 24.3%, as measured by the Consumer Price Index. Other key contributors to imaging spending growth were increased use (7.4 percentage points [pp]), shifts toward advanced modalities (4.0 pp), and demographic changes (3.5 pp). Shifts in care settings and provider network participation resulted in 2.5-pp and 0.3-pp imaging spending decreases, respectively. In sum, imaging spending decreased as a share of all health care spending and relative to inflation, as intended by concurrent cost-containment policies.

Trends in Integration Between Physician Organizations and Pharmacies for Self-Administered Drugs

Importance

Increasing integration across medical services may have important implications for health care quality and spending. One major but poorly understood dimension of integration is between physician organizations and pharmacies for self-administered drugs or in-house pharmacies.

Objective

To describe trends in the use of in-house pharmacies, associated physician organization characteristics, and associated drug prices.

Design, Setting, and Participants

A cross-sectional study was conducted from calendar years 2011 to 2019. Participants included 20% of beneficiaries enrolled in fee-for-service Medicare Parts A, B, and D. Data analysis was performed from September 15, 2020, to December 20, 2023.

Exposures

Prescriptions filled by in-house pharmacies.

Main Outcomes and Measures

The share of Medicare Part D spending filled by in-house pharmacies by drug class, costliness, and specialty was evaluated. Growth in the number of physician organizations and physicians in organizations with in-house pharmacies was measured in 5 specialties: medical oncology, urology, infectious disease, gastroenterology, and rheumatology. Characteristics of physician organizations with in-house pharmacies and drug prices at in-house vs other pharmacies are described.

Results

Among 8 020 652 patients (median age, 72 [IQR, 66-81] years; 4 570 114 [57.0%] women), there was substantial growth in the share of Medicare Part D spending on high-cost drugs filled at in-house pharmacies from 2011 to 2019, including oral anticancer treatments (from 10% to 34%), antivirals (from 12% to 20%), and immunosuppressants (from 2% to 9%). By 2019, 63% of medical oncologists, 20% of urologists, 29% of infectious disease specialists, 21% of gastroenterologists, and 22% of rheumatologists were in organizations with specialty-relevant in-house pharmacies. Larger organizations had a greater likelihood of having an in-house pharmacy (0.75 percentage point increase [95% CI, 0.56-0.94] per each additional physician), as did organizations owning hospitals enrolled in the 340B Drug Discount Program (10.91 percentage point increased likelihood [95% CI, 6.33-15.48]). Point-of-sale prices for high-cost drugs were 1.76% [95% CI, 1.66%-1.87%] lower at in-house vs other pharmacies.

Conclusions and Relevance

In this cross-sectional study of physician organization-operated pharmacies, in-house pharmacies were increasingly used from 2011 to 2019, especially for high-cost drugs, potentially associated with organizations' financial incentives. In-house pharmacies offered high-cost drugs at lower prices, in contrast to findings of integration in other contexts, but their growth highlights a need to understand implications for patient care.

Commentary on "The Impact of Vertical Integration on Physician Behavior and Healthcare Delivery: Evidence from Gastroenterology Practices"

This paper was accepted by Stefan Scholtes, healthcare management.

Conflict of Interest Statement: E. D. Shah has consulted or served on advisory boards for Ardelyx, GI Supply, Mahana, Mylan, Neuraxis, Salix, Sanofi, and Takeda.

Funding: E. D. Shah is funded by the National Institute of Diabetes and Digestive and Kidney Diseases [Grant NIH 1K23DK134752].

Utilization, Steering, and Spending in Vertical Relationships Between Physicians and Health Systems

Importance

Vertical relationships (eg, ownership or affiliations, including joint contracting) between physicians and health systems are increasing in the US.

Objective

To analyze how vertical relationships between primary care physicians (PCPs) and large health systems are associated with changes in ambulatory and acute care utilization, referral patterns, readmissions, and total medical spending for commercially insured individuals.

Design, Setting, and Participants

This case-control study with a repeated cross-section, stacked event design analyzed outcomes of patients whose attributed PCP entered a vertical relationship with a large health care system in 2015 or 2017 compared with patients whose attributed PCP was either never or always in a vertical relationship with a large health system from 2013 to 2017 in the state of Massachusetts. The sample consisted of commercially insured patients who met enrollment criteria and who were attributed to PCPs who were included in the Massachusetts Provider Database in 2013, 2015, and 2017 and for whom vertical relationships were measured. Enrollee and claims data were obtained from the 2013 to 2017 Massachusetts All-Payer Claims Database. Statistical analyses were conducted between January 5, 2021, and June 5, 2023.

Exposure

Evaluation-and-management visit with attributed PCP in 2015 to 2017.

Main Outcomes and Measures

Outcomes (which were measured per patient-year [ie, per patient per year from January to December] in this sample) were utilization (count of specialist physician visits, emergency department [ED] visits, and hospitalizations overall and within attributed PCP's health system), spending (total medical expenditures and use of high-price hospitals), and readmissions (readmission rate and use of hospitals with a low readmission rate).

Results

The sample of 4 030 224 observations included 2 147 303 females (53.3%) and 1 881 921 males (46.7%) with a mean (SD) age of 35.07 (19.95) years. Vertical relationships between PCPs and large health systems were associated with an increase of 0.69 (95% CI, 0.34-1.04; P < .001) in specialist visits per patient-year, a 22.64% increase vs the comparison group mean of 3.06 visits, and a $356.67 (95% CI, $77.16-$636.18; P = .01) increase in total medical expenditures per patient-year, a 6.26% increase vs the comparison group mean of $5700.07. Within the health care system of the attributed PCPs, the number of specialist visits changed by 0.80 (95% CI, 0.56-1.05) per patient year (P < .001), a 29.38% increase vs the comparison group mean of 2.73 specialist visits per patient-year. The number of ED visits changed by 0.02 (95% CI, 0.01-0.03) per patient year (P = .001), a 14.19% increase over the comparison group mean of 0.15 ED visits per patient-year. The number of hospitalizations changed by 0.01 (95% CI, 0.00-0.01) per patient-year (P < .001), a 22.36% increase over the comparison group mean of 0.03 hospitalizations per patient-year. There were no differences in readmission outcomes.

Conclusions

Results of this case-control study suggest that vertical relationships between PCPs and large health systems were associated with steering of patients into health systems and increased spending on patient care, but no difference in readmissions was found.

"Comprehensive Healthcare for America": Using the Insights of Behavioral Economics to Transform the U. S. Healthcare System

"Comprehensive Healthcare for America" is a largely single-payer reform proposal that, by applying the insights of behavioral economics, may be able to rally patients and clinicians sufficiently to overcome the opposition of politicians and vested interests to providing all Americans with less complicated and less costly access to needed healthcare.

Disentangling the Role of Health Care Systems in Producing High-Quality Care

This Viewpoint examines in-depth 5 features of health care systems that may influence quality of care: pooled resources, centralization, standardization, interprovider coordination, and cross-practice learning.

Changing the research paradigm for digital transformation in healthcare delivery

The growing focus on healthcare transformation (i.e., new healthcare delivery models) raises interesting issues related to research design, methodology, and funding. More than 20 years have passed since the Institute of Medicine first called for the transition to digital health with a focus on system-wide change. Yet progress in healthcare delivery system change has been painfully slow. A knowledge gap exists; research has been inadequate and critical information is lacking. Despite calls by the National Academies of Science, Engineering, and Medicine for convergent, team-based transdisciplinary research with societal impact, the preponderance of healthcare research and funding continues to support more traditional siloed discipline research approaches. The lack of impact on healthcare delivery suggests that it is time to step back and consider differences between traditional science research methods and the realities of research in the domain of transformational change. The proposed new concepts in research design, methodologies, and funding are a needed step to advance the science. The Introduction looks at the growing gap in expectations for transdisciplinary convergent research and prevalent practices in research design, methodologies, and funding. The second section summarizes current expectations and drivers related to digital health transformation and the complex system problem of healthcare fragmentation. The third section then discusses strengths and weaknesses of current research and practice with the goal of identifying gaps. The fourth section introduces the emerging science of healthcare delivery and associated research methodologies with a focus on closing the gaps between research and translation at the frontlines. The final section concludes by proposing new transformational science research methodologies and offers evidence that suggests how and why they better align with the aims of digital transformation in healthcare delivery and could significantly accelerate progress in achieving them. It includes a discussion of challenges related to grant funding for non-traditional research design and methods. The findings have implications broadly beyond healthcare to any research that seeks to achieve high societal impact.