Physician selection for hospital integration: Theoretical considerations and empirical findings.

BACKGROUND: The U.S. health care system has seen an increase in hospital-physician integration, with hospitals acquiring increasing numbers of physician practices. This shift has been linked to higher costs without significant improvements in quality. PURPOSE: This study sought to identify the characteristics of physicians who transitioned from independent practice to hospital integration. METHODOLOGY/APPROACH: We used physician variables, including quality scores, medical school rankings, years of experience, experience treating socially or medically complex patients, practice style, and location, as well as health care market and county-level variables to understand these determinants using a fixed-effects logistic regression model. RESULTS: A total of 101,746 physicians representing 66 clinical specialties satisfied our inclusion criteria, of which 3,656 became hospital-integrated between 2018 and 2020. The integrating physicians were generally less experienced, had lower quality scores, and generated less revenue per Medicare patient. Their patients, on average, had higher comorbidity scores, were more likely to be dually eligible, and resided in counties with higher poverty rates. CONCLUSION: Our findings indicate that the physicians most likely to become hospital integrated are those facing reimbursement pressures due to a complex case mix and the associated challenges of performing well on the quality metrics. We also found some support for the anticompetitive aspects of hospital-physician integration. Our results suggest that hospitals are integrating with a relatively less experienced physician workforce but one that is perhaps more capable of treating clinically and socioeconomically complex patients. PRACTICE IMPLICATIONS: Hospitals interested in using physician integration strategically to improve care quality should put more emphasis on physician quality. Such an approach has the potential to increase efficiency without sacrificing quality of care.

Hospital-physician Integration and Value-based Payment: Early Results From MIPS.

BACKGROUND: Hospital-physician integration is often justified as a driver of clinical quality improvement due to joint resources covering a broad spectrum of care. Value-based programs, such as the Medicare Merit-Based Incentive Payment System (MIPS), are intended to tie financial incentives to clinical quality, which may confer an advantage on such integrated practices. OBJECTIVES: We assessed the relationship between hospital-physician integration and MIPS performance by comparing hospital-integrated practices and independent practices. RESEARCH DESIGN: This was a cross-sectional study using data from the Quality Payment Program for the performance year 2020. SUBJECTS: Physician practices with a valid MIPS composite score in performance year 2020. MEASURES: Hospital integration was based on whether at least 75% of a practice's physicians either billed most of their services using hospital outpatient department codes or billed through a hospital tax identifier. The primary outcome was the MIPS quality category score, and the secondary outcomes were the specific quality measures reported by practice groups. RESULTS: Of the 20 most frequently reported measures, 14 were common in both groups. No difference was observed in the quality category score between hospital-integrated practices and independent practices in either unadjusted comparisons or after adjusting for practice characteristics, including practice size, geography, specialty mix, and case mix. In the secondary outcome models for specific quality measures, hospital-integrated practices achieved higher scores on most overlap measures but not all. CONCLUSIONS: The findings on quality category score suggest that hospital integration does not confer much advantage in the context of MIPS quality performance.

Hospital-physician integration and risk-coding intensity.

Hospital-physician integration has surged in recent years. Integration may allow hospitals to share resources and management practices with their integrated physicians that increase the reported diagnostic severity of their patients. Greater diagnostic severity will increase practices' payment under risk-based arrangements. We offer the first analysis of whether hospital-physician integration affects providers' coding of patient severity. Using a two-way fixed effects model, an event study, and a stacked difference-in-differences analysis of 5 million patient-year observations from 2010 to 2015, we find that the integration of a patient's primary care doctor is associated with a robust 2%-4% increase in coded severity, the risk-score equivalent of aging a physician's patients by 4-8 months. This effect was not driven by physicians treating different patients nor by physicians seeing patients more often. Our evidence is consistent with the hypothesis that hospitals share organizational resources with acquired physician practices to increase the measured clinical severity of patients. Increases in the intensity of coding will improve vertically-integrated practices' performance in alternative payment models and pay-for-performance programs while raising overall health care spending.

Association of a Medicare Outpatient Payment Reform With Hospital-Primary Care Integration: Heterogeneity Across Markets and Physicians.

BACKGROUND: Hospital-physician integration increased rapidly in the past decade, threatening the affordability of care with minimal gains in quality. Medicare recently reformed its facility fee payments to hospitals for office consultations delivered by hospital-integrated physicians. This policy reform, affecting 200 million office visits annually, may have inadvertently encouraged hospitals to integrate with certain primary care physicians. OBJECTIVE: The objective of this study was to determine whether the policy reform was associated with hospital-primary care integration. RESEARCH DESIGN: I used a large sample of primary care physicians (n=98,884) drawn from Medicare claims data. I estimated cross-sectional multivariable linear probability models to measure whether the change in physicians' value-to-hospitals was associated with integration. RESULTS: The reform created heterogenous results: some physicians' value-to-hospitals decreased, while others increased (first percentile to 99th percentile, -$16,000 to $47,000). This change in value had a small association with integration: for every $10,000 increase, a physician was about 0.34 percentage points (95% confidence interval: 0.16-0.52) more likely to become integrated. Among high-volume physicians, the reform had larger effects: physicians whose value-to-hospitals grew by $20,000 or more were nearly 3 percentage points more likely to become integrated. Changes in value had no effect in concentrated hospital markets and rural areas. CONCLUSIONS: Effects of Medicare's site-based payments on hospital-primary care integration were concentrated among a small subset of physicians. Reforms to Medicare payment policy could influence integration among this group.

Predictive Model-Driven Hotspotting to Decrease Emergency Department Visits: a Randomized Controlled Trial.

BACKGROUND: Emergency department (ED) visits contribute substantially to health care expenditures. Case management has been proposed as a strategy to address the medical and social needs of complex patients. However, strong research designs to evaluate the effectiveness of such interventions are limited. OBJECTIVES: To evaluate whether a community-based case management program was associated with reduced ED utilization among complex patients. DESIGN: Patients whose risk exceeded a threshold were randomly assigned to a group offered case management or to the control group. Assignment occurred at five intervals between November 2017 and January 2019. Program effectiveness for all assigned patients was assessed using an intention-to-treat effect. Program effectiveness among those who received treatment was assessed using a local average treatment effect, estimated using instrumental variables. Both estimators were adjusted for baseline characteristics using linear models. PARTICIPANTS: Adults over age 18 with at least one health care encounter with Michigan Medicine or St. Joseph Mercy Health System between June 2, 2016, and November 27, 2018. INTERVENTIONS: Intervention arm participants (n = 486) were offered coordinated case management across medical, mental health, and social service organizations. Control arm participants (n = 409) received usual care. MAIN MEASURES: The primary outcome was the number of ED visits in the 6 months following randomization into the study. Secondary outcomes were 6-month counts of inpatient and outpatient visits. KEY RESULTS: Of the 486 patients assigned to the intervention, 131 (27%) consented to receive case management. The intention-to-treat effect on ED visits was + 0.14 (95% CI: - 0.27 to + 0.55). The local average treatment effect among those who consented and received case management was + 0.53 (95% CI: - 1.00 to + 2.05). Intention-to-treat and local average treatment effects were not significant for secondary outcomes. CONCLUSIONS: The community case management intervention targeting ED visits was not associated with reduced utilization. Future case management interventions may benefit from additional patient engagement strategies and longer evaluation time periods. TRIAL REGISTRATION: Clinicaltrials.gov Identifier: NCT03293160.

Physician Participation in Medicare Accountable Care Organizations and Spillovers in Commercial Spending.

IMPORTANCE: The benefits of public payment policy may extend to private populations through "spillover" effects. If cost-saving efforts in Medicare also reduce costs among commercially insured patients, Medicare payment systems could be a versatile policy tool in future reform efforts. OBJECTIVES: To determine whether physicians who participated in a Medicare Accountable Care Organization (ACO) reduced spending among their commercial patients. DESIGN: This was a retrospective, longitudinal study which was conducted using Blue Cross Blue Shield of Michigan (BCBSM) claims data from 2010 to 2015. We compared patients seen by physicians who participated in a Medicare ACO to patients whose physicians were not part of an ACO. We used a difference-in-differences (DIDs) design to test whether physician participation in an ACO was associated with reduced spending among their commercially insured patients. We also tested for heterogeneous effects: we assessed whether spillovers were larger among patients with clinical conditions (acute myocardial infarction, pneumonia, congestive heart failure) that have previously been targeted by Medicare payment programs. SETTING: This was a population-based study of commercially insured patients in Michigan. PARTICIPANTS: Patients who experienced a significant clinical episode (eg, labor and delivery, acute myocardial infarction) between 2010 and 2015. EXPOSURE: Our patient-level exposure is treatment by a Medicare ACO-affiliated physician. MAIN OUTCOMES AND MEASURES: Medical spending of 0-90 days and 91-365 days after a clinical episode. RESULTS: Patients in the exposure group (n=54,750) and in the control group (n=137,883) were similar in demographic characteristics of age, sex, and type of clinical episodes. Adjusted mean 90-day spending in the preexposure period was $21,292 among the exposure group and $21,157 among the comparison group; these means declined to $21,250 and $20,995 in the postperiod, yielding a DIDs estimate of $119 [95% confidence interval (CI), -$170 to $408]. Adjusted means for 91-365 days spending in the preperiod were $4258 among the exposure group and $4251 among the comparison group; these means rose to $4338 and $4421 in the postperiod, yielding a DIDs estimate of -$90 (95% CI, -$312 to $132). We also separately examined patients with conditions that have been targeted by other Medicare payment programs. Among these patients, 90-day spending did not differ between exposure and comparison groups (DIDs, -$223; 95% CI, -$2037 to $1591), although 91-365 days spending decreased among the exposure group with marginal statistical significance (DIDs, -$1160; 95% CI, -$2459 to $140). CONCLUSIONS AND RELEVANCE: Physicians who participated in Medicare ACOs did not reduce spending among most of their commercially insured patients. Medicare policy is unlikely to confer significant spillover benefits to the commercially insured population.

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.

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.

The Effects of the Medicaid Expansion on Hospital Utilization, Employment, and Capital.

In recent years, hospitals reacted to changes in demand caused by the Affordable Care Act Medicaid expansions. We conducted a difference-in-differences analysis that compared changes to hospital demand and supply in Medicaid expansion and nonexpansion states. We used 2010-2016 data from the American Hospital Association and the Healthcare Cost Report Information System to quantify changes to hospital utilization and characterize how hospitals adjusted labor and capital inputs. During the period studied, the Medicaid expansion was associated with increases in emergency department visits and other outpatient hospital visits. We find strong evidence that hospitals met increases in demand by hiring nursing staff and weaker evidence that they increased hiring of technicians and investments in equipment. We found no evidence that hospitals adjusted hiring of physicians, support staff, or investments in other capital inputs.

Hospital-Physician Integration Is Associated With Greater Use Of Cardiac Catheterization And Angioplasty.

In the US in recent years, hospital-physician integration has become a dominant form of consolidation in health care. This transition away from independent practice has raised questions about whether hospital-employed physicians may be more likely than independent physicians to refer patients to high-intensity, hospital-based services. We used Medicare claims data from the period 2013-20 to identify patients who received a new diagnosis of stable angina, a common cardiovascular condition that entails clinical discretion in treatment choice. Using linear probability models and an instrumental variables model, we found that patients whose care was managed by a hospital-integrated cardiologist were no more likely to receive stress tests (an office-based procedure) than those whose care was managed by an independent cardiologist. However, these patients were much more likely to receive high-intensity, hospital-based coronary interventions. These results suggest that hospital-physician integration is an important factor in the intensity of treatment received by patients with stable angina. Policy makers may see these findings as additional impetus for more aggressive antitrust enforcement of integrated arrangements between hospitals and physicians and for other regulatory or payment mechanisms that might deter hospitals from using such arrangements to promote high-intensity treatment unnecessarily.

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 to 2018. We measured increases in integration and changes in the number of independent and hospital-owned practices. DATA COLLECTION/EXTRACTION METHODS: Not applicable. PRINCIPAL FINDINGS: In 2011, 18% of cardiologists were integrated, rising to 25% in 2016. Of this rise, 48% occurred with no acquisitions. Physicians who had completed residencies in the past 5 years (early career physicians) had higher rates of integration that also increased over time: the percentage of early career physicians joining hospital systems rose from 25% to 32%, 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.

Vertical Integration of Hospitals and Physicians: Economic Theory and Empirical Evidence on Spending and Quality.

Hospital-physician vertical integration is on the rise. While increased efficiencies may be possible, emerging research raises concerns about anticompetitive behavior, spending increases, and uncertain effects on quality. In this review, we bring together several of the key theories of vertical integration that exist in the neoclassical and institutional economics literatures and apply these theories to the hospital-physician relationship. We also conduct a literature review of the effects of vertical integration on prices, spending, and quality in the growing body of evidence ( n = 15) to evaluate which of these frameworks have the strongest empirical support. We find some support for vertical foreclosure as a framework for explaining the observed results. We suggest a conceptual model and identify directions for future research. Based on our analysis, we conclude that vertical integration poses a threat to the affordability of health services and merits special attention from policymakers and antitrust authorities.

Psychotropic medication use and polypharmacy in children with autism spectrum disorders.

OBJECTIVE: The objectives of this study were to examine rates and predictors of psychotropic use and multiclass polypharmacy among commercially insured children with autism spectrum disorders (ASD). METHODS: This retrospective observational study used administrative medical and pharmacy claims data linked with health plan enrollment and sociodemographic information from 2001 to 2009. Children with ASD were identified by using a validated ASD case algorithm. Psychotropic polypharmacy was defined as concurrent medication fills across ≥ 2 classes for at least 30 days. Multinomial logistic regression was used to model 5 categories of psychotropic use and multiclass polypharmacy. RESULTS: Among 33,565 children with ASD, 64% had a filled prescription for at least 1 psychotropic medication, 35% had evidence of psychotropic polypharmacy (≥ 2 classes), and 15% used medications from ≥ 3 classes concurrently. Among children with polypharmacy, the median length of polypharmacy was 346 days. Older children, those who had a psychiatrist visit, and those with evidence of co-occurring conditions (seizures, attention-deficit disorders, anxiety, bipolar disorder, or depression) had higher odds of psychotropic use and/or polypharmacy. CONCLUSIONS: Despite minimal evidence of the effectiveness or appropriateness of multidrug treatment of ASD, psychotropic medications are commonly used, singly and in combination, for ASD and its co-occurring conditions. Our results indicate the need to develop standards of care around the prescription of psychotropic medications to children with ASD.