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Hospital, physician integration linked to higher prices, spending

Financial integration of physicians and hospitals was associated with higher spending for outpatient care and commercial prices, according to research published in JAMA Internal Medicine.

Researchers reported that the increases did not correspond with any changes in utilization.

"Conceptually, physician–hospital integration could increase or decrease spending on health care," Hannah T. Neprash, a health care policy PhD candidate at Harvard Medical School, and colleagues wrote. "Integration could yield efficiencies through better coordination and management of health care, but it could also strengthen the bargaining power of provider organizations over insurers, leading to higher commercial health care prices."

The researchers assessed changes in spending and prices in 240 metropolitan statistical areas between 2008 and 2012. Neprash and colleagues analyzed data from the Truven Health MarketScan Commercial Database and Medicare claims using linear regression models. The final sample population included 7,391,335 patients who were enrolled in point-of-service or preferred-provider organizations. Analyses were adjusted for market, plan and patient characteristics, which included hospital, physician and insurer market concentration.

Results demonstrated that physician–hospital integration increased by 3.3 percentage points, from 18% to 21.3%, during the study period. There was variation among the metropolitan statistical areas (interquartile range, 0.8-5.2 percentage points).

Increases in physician–hospital integration were associated with small changes in utilization, measured by price-adjusted spending per enrollee ($14; 95% CI, –13 to 41) and an increase in annual outpatient spending ($75; 95% CI, 38-113). Changes in physician–hospital integration were not associated with changes in inpatient spending ($22; 95% CI, –1 to 46) or utilization ($10; 95% CI, –12 to 31).

"Increases in physician–hospital integration from 2008 through 2012 were associated with increased spending and prices for outpatient services, with no accompanying changes in utilization that would suggest more efficient care from better care coordination and economies of scale," Neprash and colleagues wrote. "Changes in the structure of health care provider markets and in spending should be monitored, particularly as payment systems shift away from fee-for-service, and may require additional regulatory measures to control." – by Chelsea Frajerman Pardes

Disclosure: One of the researchers reports formerly being employed by Truven Health Analytics.