Hospital-physician integration and clinical volume in traditional Medicare

OBJECTIVE

To test the effect of hospital-physician integration on primary care physicians' (PCP) clinical volume in traditional Medicare.

DATA SOURCES AND STUDY SETTING

Nationwide retrospective longitudinal study using Medicare claims and other data sources from 2010 to 2016.

STUDY DESIGN

We identified 70,000 PCPs, some of whom remained non-integrated and some who became hospital-integrated during this study period. We used an event study design to identify the effect of integration on key measures of physicians' clinical volume, including the number of claims, work-relative value units (RVUs), professional revenue generated, number of patients treated, and facility fee revenue generated.

PRINCIPAL FINDINGS

Per-physician clinical volume declined by statistically and economically significant margins. Relative to the comparison group who remained non-integrated, work RVUs fell by 7% (95% confidence interval [CI]: -8.6% to -5.5%); the number of patients treated fell by 4% (95% CI: -5.8% to -2.6%); and claims volume among PCPs who became hospital-integrated fell by over 15% (95% CI: -16.8% to -13.5%). Though professional revenue declined by $29,165 (95% CI: -$32,286 to -$26,044), this loss was almost entirely offset by increased facility fee revenue of $28,556 (95% CI: 26,909 to 30,203).

CONCLUSIONS

Hospital-physician integration may affect the quantity of clinical services delivered by PCPs to traditional Medicare beneficiaries. Reductions in clinical volume associated with integration may have long-term consequences for the supply of physician services and patient access to primary care. Future research on physician time use and patient access following hospital integration would further add to the evidence base.

Hospital-cardiologist integration often occurs without a practice acquisition

OBJECTIVE

To describe how much of the recent increase in hospital-cardiologist integration has come from acquisitions of physician practices compared to individual employment decisions. While the role of physician practice acquisitions has received considerable attention in the news, integration may also be driven by individual physicians accepting employment at hospital-based practices.

DATA SOURCES

American Medical Association Physician Masterfile and Medicare data.

STUDY DESIGN

Analysis of changes in hospital-cardiologist integration from 2011-2018. We measured increases in integration and changes in the number of independent and hospital-owned practices.

DATA COLLECTION/EXTRACTION METHODS

N/A PRINCIPAL FINDINGS: 18 percent of cardiologists were integrated in 2011, rising to 25 percent in 2016. Of this rise, 48 percent occurred with no acquisitions. Physicians who had completed residencies in the past five years (early-career physicians) had higher rates of integration which also increased over time: the percentage of early-career physicians joining hospital systems rose from 25 to 32 percent, indicating rapid growth in the number of physicians who began their careers working in hospital-based sites.

CONCLUSIONS

A large and growing portion of hospital-cardiologist integration came from hospital employment at the individual physician level. Future policies focused on preserving competition and affordability may benefit from better understanding this form of consolidation.

Hospital-physician integration and Medicare's site-based outpatient payments

OBJECTIVE

To determine the relationship between Medicare's site-based outpatient billing policy and hospital-physician integration.

DATA SOURCES

National Medicare claims data from 2010 to 2016.

STUDY DESIGN

For each physician-year, we calculated the disparity between Medicare reimbursement under hospital ownership and under physician ownership. Using logistic regression analysis, we estimated the relationship between these payment differences and hospital-physician integration, adjusting for region, market concentration, and time fixed effects. We measured integration status using claims data and legal tax names.

DATA COLLECTION

The study included integrated and non-integrated physicians who billed Medicare between January 1, 2010, and December 31, 2016 (n = 2 137 245 physician-year observations).

PRINCIPAL FINDINGS

Medicare reimbursement for physician services would have been $114 000 higher per physician per year if a physician were integrated compared to being non-integrated. Primary care physicians faced a 78% increase, medical specialists 74%, and surgeons 224%. These payment differences exhibited a modest positive relationship to hospital-physician vertical integration. An increase in this outpatient payment differential equivalent to moving from the 25th to 75th percentile was associated with a 0.20 percentage point increase in the probability of integrating with a hospital (95% CI: 0.0.10-0.30). This effect was slightly larger among primary care physicians (0.27, 95% CI: 0.18 to 0.35) and medical specialists (0.26, 95% CI: 0.05 to 0.48), while not significantly different from zero among surgeons (-0.02; 95% CI: -0.27 to 0.22).

CONCLUSIONS

The payment differences between outpatient settings were large and grew over time. Even routine annual outpatient payment updates from Medicare may prompt some hospital-physician vertical integration, particularly among primary care physicians and medical specialists.

Landscape of Health Systems in the United States

Despite the prevalence of vertical integration, data and research focused on identifying and describing health systems are sparse. Until recently, we lacked an enumeration of health systems and an understanding of how systems vary by key structural attributes. To fill this gap, the Agency for Healthcare Research and Quality developed the Compendium of U.S. Health Systems, a data resource to support research on comparative health system performance. In this article, we describe the methods used to create the Compendium and present a picture of vertical integration in the United States. We identified 626 health systems in 2016, which accounted for 70% of nonfederal general acute care hospitals. These systems varied by key structural attributes, including size, ownership, and geographic presence. The Compendium can be used to study the characteristics of the U.S. health care system and address policy issues related to provider organizations.