I think we all can agree now that provider integration doesn’t lower healthcare prices. When hospitals buy or merge with other hospitals, when medical practices buy or merge with other medical practices and when hospitals acquire medical practices, healthcare prices go up. The economic combination of more negotiating leverage with payers and less provider market competition is too lucrative to resist.
Higher prices for care might be more palatable to patients if those integrations also brought along with them things like higher quality care, expanded access to care or an improved customer experience.
A new study that’s out, unfortunately, suggests that’s wishful thinking and more empty rhetoric from healthcare executives. It’s just higher prices, folks, sorry. Nothing to see here.
Researchers from Dartmouth, the University of California and Tufts Medical Center in Boston wanted to find out if there was any link between financial integration through provider consolidation and delivery and payment reforms that promote better patient care. Who better to ask than the hospitals, health systems and medical practices themselves, right?
So the researchers administered this rather complicated survey—that I’ll try my best to simplify—to 739 hospitals and 2,189 physician practices. They asked the hospitals and physician practices to use detailed measures to score their progress on nine different care delivery and payment reforms. The hospitals and physicians scored their progress on a 100-point scale. More progress, more points.
- The nine difference care delivery and payment reforms were:
- Care of complex, high-need patients
- Participation in quality-focused payment programs
- Screening for clinical outcomes
- Screening for social needs
- Support for care transitions
- Use of EHR-based clinical decision support
- Use of evidence-based guidelines
- Use of patient engagement strategies
- Use of quality-focused information management
The researchers compared self-scoring by three levels of integration for hospitals and for medical practices: independent (no relationship with any other hospital or practice); simple (relationship with at least one other hospital or practice but not part of a larger system); and complex (relationship with at least one other hospital or practice and part of a larger system with other hospitals or practices).
Here’s what the researchers found:
- Independent hospitals scored themselves the same on five of the nine reforms compared with hospitals in simple or complex systems
- Hospitals in simple systems scored themselves the same on all nine reforms compared with hospitals in complex systems
- Independent physician practices scored themselves the same on seven of the nine reforms compared with practices in simple or complex systems
“We found little relationship between financial integration of hospitals and physician practices and better quality, as measured by higher levels of adoption of care delivery and payment reforms,” said the researchers, who published their results in Health Affairs.
Other than independent hospitals getting a rush when they first joined a system, system-ness or higher levels of integration didn’t correlate with doing things that could make you better at patient care.
The big question, of course, is why? The researchers offered a few possibilities and danced around what I think is the answer. The answer is because they don’t have to yet.
When you control most or all of a market, your customers have no choice but to use you and pay your prices even if the care is OK and the service is lousy. There is no competitive reason to improve. Rather than innovate or re-imagine your business model, it’s cheaper and easier to buy more market share.
And buying market share is exactly what’s happening.
In a separate study in Health Affairs, researchers from the Agency for Healthcare Research and Quality said 72 percent of hospitals belonged to systems in 2018 as did 51 percent of doctors. That’s up from 70 percent and 40 percent, respectively, from 2016. Previous data from AHRQ, which we wrote about last December, showed that the number of systems increased to 637 in 2018 from 626 in 2016.
So what we have are more systems consolidating with more hospitals and medical practices. And now evidence that more consolidation doesn’t mean working harder to improve patient care.
This is why we need a customer revolution in healthcare.
Thanks for reading.
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