Outpatient Spending Rises as Physician-Hospital Integration Grows
Communities that experienced increases in physician-hospital integration also saw increases in annual outpatient spending, according to a study published Monday in JAMA Internal Medicine, the Wall Street Journal reports (Wilde Mathews, Wall Street Journal, 10/19).
For the study, Harvard Medical School researchers used data from Medicare and other sources to analyze spending and prices from 2008 to 2012 for about 7.4 million adults with commercial health plans in 240 metropolitan areas (Evans, "Vital Signs," Modern Healthcare, 10/19).
According to the researchers, the study is the first to look at the relationship between hospital-physician integration and outpatient care prices (Harvard release, 10/19).
The study found that by 2012 an average of 21.3% of doctors in the metro areas were employed by a hospital or worked for a hospital-owned practice, up from 18% in 2008.
The study did not find a significant change in spending for inpatient stays (Wall Street Journal, 10/19). However, researchers found that a market experiencing a 5.2 percentage point increase in physician-hospital integration was associated with an increase in average annual outpatient costs per privately insured person of $75 ("Vital Signs," Modern Healthcare, 10/19). According to study co-author J. Michael McWilliams, the average increase in outpatient spending for a patient whose physician practice was acquired by a hospital was about $1,400.
The researchers found there were only "minimal" increases in use of outpatient care. Therefore, they wrote, the outpatient cost increases were "driven almost entirely by price increases" (Wall Street Journal, 10/19). The price increases likely resulted from larger provider organizations' "enhanced market power" ("Vital Signs," Modern Healthcare, 10/19).
The authors noted that the study did not analyze care quality and that better quality of care could justify increased prices (Rapaport, Reuters, 10/19).
Meanwhile, the American Hospital Association said the study "is not reflective of the changes happening in today's health care market," as it does not show the effects of alternative payment arrangements that AHA argued "have led to quality improvement and slower cost growth" (Wall Street Journal, 10/19).
McWilliams noted that new alternative payment arrangements could mean that, over time, "physician-hospital integration could conceivably offer some distinct efficiencies in terms of higher quality of care at a lower cost" (Reuters, 10/19).
However, study co-author Hannah Neprash said there is a possibility that the increased integration spurred in part by the Affordable care Act could lead to increased costs. "There's concern that this trend may accelerate as providers reorganize to meet the challenges of new payment models," she said (Boodman, "Stat," Boston Globe, 10/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.