Expenditures and Quality: Hospital- and Health System-Affiliated Versus Independent Physicians in Virginia.

OBJECTIVES: The American Medical Association has reported that 2016 was the first year in which fewer than half (47.1%) of all practicing physicians owned their own practice. Across the United States, there has been consolidation of physicians and hospital and health systems, resulting in questions about the effect of this on healthcare expenditures. The aim of this study was to compare the expenditures per patient between hospital- and health system-affiliated physicians and independent physicians. METHODS: The author used Virginia's new statewide all-payer claims database to analyze expenditures and quality for 3 years for hospital- and health system-affiliated physicians versus independent physicians. The database had all claims statewide for Virginians with individual or group commercial insurance coverage: 1.95 million patients in 2013, 2 million in 2014, and 2.1 million in 2015. The average annual expenditure for each physician was adjusted for average patient condition burden (risk) and differences in geographic input costs using regression analysis. Measures of primary care quality were obtained from the claims data using evidence-based measures from national health quality organizations. RESULTS: Hospital- and health system-affiliated physicians had annual expenditures per patient ranging from 10.3% to 14.6% higher than independent physicians. Most of the measures of primary care quality were not significantly different. CONCLUSIONS: Virginia patients, employers, and managed care companies incurred higher per-patient expenditures with hospital and health system physicians than with independent physicians.

Capital Gains: Attracting Investors Without Losing Independence.

Can physicians line up venture capital without letting go of their independence? It's not so easy.

What Role Does Efficiency Play in Understanding the Relationship Between Cost and Quality in Physician Organizations?

BACKGROUND: The belief that there is inefficiency, or the potential to improve patient health at current levels of spending, is driving the push for greater value in health care. Previous studies demonstrate overuse of a narrow set of services, suggesting provider inefficiency, but existing studies neither quantify inefficiency more broadly nor assess its variation across physician organizations (POs). DATA AND METHODS: We used data on quality of care and total cost of care from 129 California POs participating in a statewide value-based pay-for-performance program. We estimated a production function with quality as the output and cost as the input, using a stochastic frontier model, to develop a measure of relative efficiency for each PO. To validate the efficiency measure, we examined correlations of PO efficiency estimates with indicators representing overuse of services. RESULTS: The estimated production function showed that PO quality was positively associated with costs, although there were diminishing marginal returns to spending. A certain minimum level of spending was associated with high quality even among efficient POs. Most strikingly, however, POs had substantial variation in efficiency, producing widely differing levels of quality for the same cost. CONCLUSIONS: Differences among POs in the efficiency with which they produce quality suggest opportunities for improvements in care delivery that increase quality without increasing spending.

Independent practice associations: Advantages and disadvantages of an alternative form of physician practice organization.

BACKGROUND: Value-based purchasing (VBP) favors provider organizations large enough to accept financial risk and develop care management infrastructure. Independent Practice Associations (IPAs) are a potential alternative for physicians to becoming employed by a hospital or large medical group. But little is known about IPAs. METHODS: We selected four IPAs that vary in location, structure, and strategy, and conducted interviews with their president and medical director, as well as with a hospital executive and health plan executive familiar with that IPA. RESULTS: The IPAs studied vary in size and sophistication, but overall are performing well and are highly regarded by hospital and health plan executives. IPAs can grow rapidly without the cost of purchasing and operating physician practices and make it possible for physicians to remain independent in their own practices while providing the scale and care management infrastructure to make it possible to succeed in VBP. However, it can be difficult for IPAs to gain cooperation from hundreds to thousands of independent physicians, and the need for capital for growth and care management infrastructure is increasing as VBP becomes more prevalent and more demanding. CONCLUSIONS: Some IPAs are succeeding at VBP. As VBP raises the performance bar, IPAs will have to demonstrate that they can achieve results equal to more highly capitalized and tightly structured large medical groups and hospital-owned practices. IMPLICATIONS: Physicians should be aware of IPAs as a potential option for participating in VBP. Payers are aware of IPAs; the Medicare ACO program and health insurer ACO programs include many IPAs.

Total expenditures per patient in hospital-owned and physician-owned physician organizations in California.

IMPORTANCE: Hospitals are rapidly acquiring medical groups and physician practices. This consolidation may foster cooperation and thereby reduce expenditures, but also may lead to higher expenditures through greater use of hospital-based ambulatory services and through greater hospital pricing leverage against health insurers. OBJECTIVE: To determine whether total expenditures per patient were higher in physician organizations (integrated medical groups and independent practice associations) owned by local hospitals or multihospital systems compared with groups owned by participating physicians. DESIGN AND SETTING: Data were obtained on total expenditures for the care provided to 4.5 million patients treated by integrated medical groups and independent practice associations in California between 2009 and 2012. The patients were covered by commercial health maintenance organization (HMO) insurance and the data did not include patients covered by commercial preferred provider organization (PPO) insurance, Medicare, or Medicaid. MAIN OUTCOMES AND MEASURES: Total expenditures per patient annually, measured in terms of what insurers paid to the physician organizations for professional services, to hospitals for inpatient and outpatient procedures, to clinical laboratories for diagnostic tests, and to pharmaceutical manufacturers for drugs and biologics. EXPOSURES: Annual expenditures per patient were compared after adjusting for patient illness burden, geographic input costs, and organizational characteristics. RESULTS: Of the 158 organizations, 118 physician organizations (75%) were physician-owned and provided care for 3,065,551 patients, 19 organizations (12%) were owned by local hospitals and provided care for 728,608 patients, and 21 organizations (13%) were owned by multihospital systems and provided care for 693,254 patients. In 2012, physician-owned physician organizations had mean expenditures of $3066 per patient (95% CI, $2892 to $3240), hospital-owned physician organizations had mean expenditures of $4312 per patient (95% CI, $3768 to $4857), and physician organizations owned by multihospital systems had mean expenditures of $4776 (95% CI, $4349 to $5202) per patient. After adjusting for patient severity and other factors over the period, local hospital-owned physician organizations incurred expenditures per patient 10.3% (95% CI, 1.7% to 19.7%) higher than did physician-owned organizations (adjusted difference, $435 [95% CI, $105 to $766], P = .02). Organizations owned by multihospital systems incurred expenditures 19.8% (95% CI, 13.9% to 26.0%) higher (adjusted difference, $704 [95% CI,$512 to $895], P < .001) than physician-owned organizations. The largest physician organizations incurred expenditures per patient 9.2% (95% CI, 3.8% to 15.0%, P = .001) higher than the smallest organizations (adjusted difference, $130 [95% CI, $-32 to $292]). CONCLUSIONS AND RELEVANCE: From the perspective of the insurers and patients, between 2009 and 2012, hospital-owned physician organizations in California incurred higher expenditures for commercial HMO enrollees for professional, hospital, laboratory, pharmaceutical, and ancillary services than physician-owned organizations. Although organizational consolidation may increase some forms of care coordination, it may be associated with higher total expenditures.

Implementing clinical and financial collaboration between payers and providers.

An IPA learned three important lessons while implementing a clinical and financial collaboration with its payers: Eliminate mixed messages. Focus on delivery and operational changes, not just payment change. Set realistic expectations and deliver on them.

Do physician organizations located in lower socioeconomic status areas score lower on pay-for-performance measures?

BACKGROUND: Physician organizations (POs)--independent practice associations and medical groups--located in lower socioeconomic status (SES) areas may score poorly in pay-for-performance (P4P) programs. OBJECTIVE: To examine the association between PO location and P4P performance. DESIGN: Cross-sectional study; Integrated Healthcare Association's (IHA's) P4P Program, the largest non-governmental, multi-payer program for POs in the U.S. PARTICIPANTS: 160 POs participating in 2009. MAIN MEASURES: We measured PO SES using established methods that involved geo-coding 11,718 practice sites within 160 POs to their respective census tracts and weighting tract-specific SES according to the number of primary care physicians at each site. P4P performance was defined by IHA's program and was a composite mainly representing clinical quality, but also including measures of patient experience, information technology and registry use. KEY RESULTS: The area-based PO SES measure ranged from -11 to +11 (mean 0, SD 5), and the IHA P4P performance score ranged from 23 to 86 (mean 69, SD 15). In bivariate analysis, there was a significant positive relationship between PO SES and P4P performance (p < 0.001). In multivariate analysis, a one standard deviation increase in PO SES was associated with a 44% increase (relative risk 1.44, 95%CI, 1.22-1.71) in the likelihood of a PO being ranked in the top two quintiles of performance (p < 0.001). CONCLUSIONS: Physician organizations' performance scores in a major P4P program vary by the SES of the areas in which their practice sites are located. P4P programs that do not account for this are likely to pay higher bonuses to POs in higher SES areas, thus increasing the resource gap between these POs and POs in lower SES areas, which may increase disparities in the care they provide.

Formation of combined urology and radiation oncology practices: objective data from radiation oncologists for rationale.

OBJECTIVES: We sought to determine motivating factors for radiation oncologists to form joint ventures with urologists to provide intensity modulated radiation treatment (IMRT) to prostate cancer patients that the urologists diagnose. METHODS: The American College of Radiation Oncology developed a survey and requested responses from radiation oncologists who had professional relationships with urologists to deliver prostate cancer intensity modulated radiation treatment in a combined practice. Daily patient treatment totals and practice characteristics were queried. To date, there is no actual data to elucidate the motivation of radiation oncologists to form such an association. RESULTS: All 75 respondents indicated that their practice model was a multispecialty group, in which the radiation oncologist has an employment agreement to receive the professional component for radiation treatment services, and was also a financial partner in the technical component. All respondents were economically displaced in a geographic region by existing radiation oncology groups, hospital-based radiation oncology practice, or both. All radiation oncologist respondents stated that they were unable to achieve professional partnership status within a radiation oncology group, and 98.6% were unable to obtain a share of the technical component for radiation treatment. Eighty-six percent of respondents treated patients with nonprostate malignancies in their facility, at a rate of 1.9 times more nonprostate patients than prostate patients. CONCLUSION: This data may indicate that radiation oncologists combine with urologists in a geographic area where the radiation oncologist has been economically displaced, has existing referral patterns, and continues to treat other patients with nonprostate malignancies.

A model for integrating independent physicians into accountable care organizations.

The Affordable Care Act encourages the formation of accountable care organizations as a new part of Medicare. Pending forthcoming federal regulations, though, it is unclear precisely how these ACOs will be structured. Although large integrated care systems that directly employ physicians may be most likely to evolve into ACOs, few such integrated systems exist in the United States. This paper demonstrates how Advocate Physician Partners in Illinois could serve as a model for a new kind of accountable care organization, by demonstrating how to organize physicians into partnerships with hospitals to improve care, cut costs, and be held accountable for the results. The partnership has signed its first commercial ACO contract effective January 1, 2011, with the largest insurer in Illinois, Blue Cross Blue Shield. Other commercial contracts are expected to follow. In a health care system still dominated by small, independent physician practices, this may constitute a more viable way to push the broader health care system toward accountable care.

Medicare HMO impact on utilization at the end of life.

OBJECTIVE: To estimate the effect of independent practice association (IPA) model HMOs and the Kaiser Foundation Health Plan's group model on inpatient utilization of Medicare beneficiaries in the last 2 years of life, compared with traditional fee-for-service (FFS) coverage. STUDY DESIGN: Data from the Centers for Medicare & Medicaid Services were linked to inpatient discharge data from the California Office of Statewide Health Planning and Development for 1991-2001. A sample of aged Medicare beneficiaries who died between January 1998 and June 2001 and were continuously enrolled during the 2 years before death in (1) FFS (n = 234,498), (2) an IPA (n = 109,577), or (3) Kaiser (n = 29,434) were selected. METHODS: The probability of at least 1 hospitalization, number of inpatient days given at least 1 hospitalization, and total inpatient days per year in the last 2 years of life were estimated for each subgroup. A 2-part regression model, which adjusted for age, sex, Medicaid status, race, ethnicity, and chronic condition associated with the last hospitalization, was applied to determine the HMO-FFS difference in inpatient utilization during the last 2 years of life. RESULTS: During their last 2 years of life, decedents in IPAs and Kaiser used approximately 34% and 51% fewer inpatient days, respectively, than decedents in FFS. CONCLUSIONS: Medicare beneficiaries who died while enrolled in an HMO, particularly Kaiser, had many fewer hospital days during the 2 years before death than beneficiaries who died with FFS coverage.