Hospital markets in the United States, 2007-2017.

BACKGROUND: U.S. hospital markets have undergone consolidation in recent decades with the growth of large "health systems," but little is known about the characteristics of systems, and whether certain geographic areas or service types (e.g. intensive care, obstetrics) have been differentially impacted by consolidation. METHODS: Using 2007-2017 American Hospital Association data, we characterized health systems and their growth, and determined how changes in hospital market structure have differentially affected specific service types and geographic areas. RESULTS: Despite a national trend of reduced hospital utilization, health systems grew larger during our study period. Hospital markets were already highly concentrated in 2007 and became even more concentrated between 2007 and 2017, across all service types that we measured. The least concentrated service was emergency department care, while intensive care and obstetrics were the most concentrated. As of 2017, 19.0% of markets - representing 11.2 million Americans - are served by only one hospital system. Concentrated markets are less populous, poorer areas and have lower physician supply than less concentrated markets. CONCLUSIONS: Hospital markets were highly concentrated in 2007 and have since become more concentrated in the subsequent decade. Hospital consolidation is a nationwide phenomenon, and is occurring across hospital service types. IMPLICATIONS: Antitrust alone may be insufficient to address high and increasing hospital market power. Decreasing barriers to entry may allow for more competition.

Trends in acquisitions of physician practices and subsequent clinical integration: A mixed methods study.

RATIONALE, AIMS, AND OBJECTIVES: The US health care system is marked by a high degree of fragmentation in both delivery and financing. Some evidence suggests that attempts to reduce fragmentation have led to significant provider consolidation, including hospital acquisitions of physician groups, or "vertical integration." The objective was to use time-series data to quantify trends in and characteristics of hospital acquisitions of physician practices. A secondary objective was to use case studies to determine the motivations for these acquisitions and to identify what integration results from these transactions. METHODS: Data on annual hospital acquisition of physician practices was used to quantify trends and characteristics of acquiring hospitals between 2006 and 2013. Four in-depth case studies, including structured interviews with hospital leadership, were then conducted of recent hospital acquisitions of primary care practices. RESULTS: Acquisitions of physician practices have been increasing over the last decade and peaked in 2011. Most acquisitions were of small primary care, multi-specialty, or cardiology practices. The case studies revealed that the primary motivation for hospital acquisitions was to increase referrals and negotiate higher payment rates. These transactions resulted in very limited clinical integration, while all acquiring hospitals sought to integrate health information systems. CONCLUSIONS: Among 4 case-studies of hospital acquisition of physician practices, the primary motivation was financial and competitive motivations. This suggests that policymakers should be mindful of the potential negative effects of these acquisitions on health care costs, as well as the uncertainty of clinical benefits. Policymakers may need supplementary strategies to deliver the goals of reduced costs and improved quality of care.

Provider-Offered Medicare Advantage Plans: Recent Growth And Care Quality.

Hospitals and health systems are increasingly offering their own insurance products, a type of consolidation known as "vertical integration." The relationship between plan-provider vertical integration and quality of care has not been examined extensively or over time. We created a new data set of all vertically integrated Medicare Advantage contracts operating in the period 2011-15 and tracked their characteristics and quality over time. While the percentage of vertically integrated contracts increased slightly between 2011 and 2015, the percentage of all Medicare Advantage enrollees in them declined from 24.4 percent to 22.0 percent. Vertically integrated contracts generally were of higher quality than other contracts, with the largest differences related to enrollee satisfaction. These findings provide the first detailed, longitudinal look at vertically integrated Medicare Advantage plan enrollment and quality.

Recent Growth In Medicare Advantage Enrollment Associated With Decreased Fee-For-Service Spending In Certain US Counties.

Recent increases in Medicare Advantage enrollment may have caused lower spending growth in the fee-for-service (FFS) Medicare population. We identified the counties of largest Medicare Advantage growth and determined if increased enrollment was associated with reduced FFS Medicare spending growth in those counties. We found that 73 percent of counties experienced at least a 5-percentage-point increase in Medicare Advantage penetration between 2007 and 2014, with the most growth occurring in larger and poorer counties in the Northeast and South. The association between Medicare Advantage growth and FFS Medicare costs varied depending on baseline Medicare Advantage penetration: In counties with low baseline penetration, Medicare Advantage growth did not have a significant effect on per capita FFS Medicare spending, whereas in counties in the highest quartile of baseline Medicare Advantage penetration, it was associated with a significant decrease in FFS Medicare spending growth ($154 annually per 10-percentage-point increase in Medicare Advantage). These findings suggest that Medicare Advantage growth may be playing a role in moderating FFS Medicare costs.