Physician-hospital Integration Research Articles

Does hospital-physician integration affect spending?

Does hospital-physician integration affect spending?

Vertical integration: hospital ownership of physician practices is associated with higher prices and spending.

We examined the consequences of contractual or ownership relationships between hospitals and physician practices, often described as vertical integration. Such integration can reduce health spending and increase the quality of care by improving communication across care settings, but it can also increase providers' market power and facilitate the payment of what are effectively kickbacks for inappropriate referrals. We investigated the impact of vertical integration on hospital prices, volumes (admissions), and spending for privately insured patients. Using hospital claims from Truven Analytics MarketScan for the nonelderly privately insured in the period 2001-07, we constructed county-level indices of prices, volumes, and spending and adjusted them for enrollees' age and sex. We measured hospital-physician integration using information from the American Hospital Association on the types of relationships hospitals have with physicians. We found that an increase in the market share of hospitals with the tightest vertically integrated relationship with physicians--ownership of physician practices--was associated with higher hospital prices and spending. We found that an increase in contractual integration reduced the frequency of hospital admissions, but this effect was relatively small. Taken together, our results provide a mixed, although somewhat negative, picture of vertical integration from the perspective of the privately insured.

The Costs of Physician-Hospital Integration

This study examines an understudied, albeit important, area of organizational costs that are incurred when transactions are governed within the firm. Specifically, the costs incurred in physician-hospital integration are analyzed through interviews with physicians and hospital administrators in a multiple-case, inductive study. Two types of physician-hospital arrangements are examined: (1) an employed model (i.e., integrated salary model, a group of physicians integrated by a hospital system) and (2) a private practice (i.e., a physician or group of physicians independent of economic or policy control). This research design enables me to investigate both how physician behavior varies across hospital boundaries and the organizational costs that exist in physician-hospital integration. The interviews suggest that integration leads to the attenuation of incentives as well as three evident organizational costs, namely, monitoring, coordination, and cooperation costs.

At the Heart of Integration: Aligning Physicians and Administrators to Create New Value

Because of its ability to create real incremental value for patients and providers, physician-hospital integration will continue to play a major role in transforming the way healthcare is delivered. Integration is more than a transaction, and without developing the right culture, new integrated organizations will struggle to transform their current model of care. Confronted with regulatory and specialty-specific environmental forces, cardiovascular physicians have integrated with health systems at a higher rate than other specialties have. In 2007, Piedmont Healthcare launched Piedmont Heart as the first integrated cardiovascular care delivery program affiliated with a community healthcare system in greater Atlanta. Piedmont Healthcare had successfully brought together hospitals and cardiovascular physicians in an organizational structure that allowed for the right culture, resulting in true integration and patient-centered care. Today, Piedmont Heart is one of the largest physician groups in the United States focused on delivering high-quality outcomes, aligning multidisciplinary cardiovascular initiatives, and allowing for smart, strategic growth. It has taken Piedmont Heart nearly five years to create new, incremental value from its center-of-excellence organizational structure, clinical pathways development, and Patient First program. Piedmont Heart had the advantage of starting earlier than many other physician-hospital integrated structures. As US healthcare moves from an industry driven by volume to one focused on value, it is organizations like Piedmont Heart that continue to drive smart integration forward and focus on innovation, despite potential disruption, that will be successful.

Gastroenterology in a New Era of Accountability: Part 3. Accountable Care Organizations

Gastroenterology in a New Era of Accountability: Part 3. Accountable Care Organizations

Building Academic Health Centersʼ Capacity to Shape and Respond to Comparative Effectiveness Research Policy

In recent years, the focus on comparative effectiveness research (CER), the funding available to support it, and the range of possible effects of CER policy on academic health centers (AHCs) have increased substantially. CER has implications for the research, education, and clinical care components of AHCs' missions. The current funding and policy environment have created specific opportunities for AHCs to shape and respond to CER policies across the four dimensions of the CER enterprise: research, human and scientific capital, data infrastructure, and translation and dissemination. Characteristics such as the degree of physician-hospital integration, the status of a health information technology infrastructure, and the presence of a well-developed cross-functional health services research capacity linked to the care delivery enterprise could help AHCs respond to these opportunities and influence future policies. AHCs are also essential to the development of methodologies and the training of the next cadre of researchers. Further, a focus on understanding what works in health care and increasing adoption of evidence-based practice must become embedded in the fabric of AHCs. Those AHCs most successful in responding to the CER challenge may leverage it as a point of differentiation in the marketplace for health care and lead transformational improvements in health.

Crossing the Health Care Chasm

The U.S. health care industry is standing on the precipice of an ever widening and deepening chasm. The breadth and depth of the health care chasm is affected by economics fueled by the unsustainable costs of providing services to an aging population and not having the means to pay for the costs. Reimbursement changes are driving physician-hospital integration primarily through physician employment models. Population growth primarily due to the baby-boomer population who start turning 65 years of age on January 2011 will increase demand for cardiac and vascular services. Timely and convenient access to services will be problematic as the number of physicians required may be stretched to capacity coupled with the likelihood that many cardiologists take early retirement given reimbursement changes. Augmenting the reimbursement challenges is the ever shrinking number of workers per Medicare beneficiary. Current legislation does little to address these challenges and may actually exacerbate them.

A critical appraisal of physician-hospital integration models

The economic environment and the current health care debate have prompted a critical reevaluation of previous and current physician-hospital integration models. Even though the independent, self-employed, private practice, medical staff remains the most common model, surgical specialists such as vascular surgeons are increasingly being employed and integrated into health care delivery systems. The degree of integration varies from minimal to full integration or full employment. This review defines the forces driving these changes and analyzes the strengths and weaknesses of each employment model from the physicians' point of view. Strategies for the successful implementation of a 21st century integrative employment model are discussed.

Monitoring technology and firm boundaries: Physician–hospital integration and technology utilization

We study the relationship between physician–hospital integration and its relation to monitoring IT utilization. We develop a theoretical model in which monitoring IT may complement or substitute for integration and test these relationships using a novel data source. Physician labor market heterogeneity identifies the empirical model. We find that monitoring IT utilization is increasing in integration, implying that expanded firm boundaries complement monitoring IT adoption. We argue that the relationship between monitoring IT and firm boundaries depends upon the contractibility of the monitored information.

Economic impact of orthopaedic trauma care on hospitals and hospital systems

Trauma is a major public health issue. The management of seriously injured patients requires the integration of rescue and transport services, resuscitation and reconstructive care in dedicated centers with access to physical and vocational rehabilitation. The management of injury is exceedingly complex and expensive. We are entering a period of uncertainty due to the convergence of decreased reimbursement, more uncompensated care and fewer specialists willing to provide on-call services. The management of injury is costly yet has clear economic benefits based upon the potential to reduce mortality and mitigate disability. Trauma care also is very sustainable under favorable conditions including regionalized systems to support volume-driven proficiency, productive specialist staffing models, an evidence-based approach to technology and a high degree of physician-hospital integration.

Medicare: The Place To Start Delivery System Reform

The development of accountable care organizations (ACOs) is an appropriate goal for delivery system reform. The Medicare program can be instrumental in starting the necessary transformations in payment design, incentives, and delivery system structure. Payment reforms are critical; should come first; and may need to be substantial, cumulative in impact, and dramatic in design. Learning from successful models of physician-hospital integration and creating new models that can pass legal, regulatory, and antitrust concerns will be needed, if the promise of ACOs is to be fulfilled.

Strategic integration of hospitals and physicians

A striking development in the healthcare market place has been the formation of strategic relationships between hospitals and physicians. Hospital–physician integration appears to be a response to rapidly expanding managed care health insurance. We examine whether integration lead to efficiency gains from transaction cost economies thereby allowing providers to offer managed care insurance plans lower prices or whether integration is really a strategy to improve bargaining power and thereby increase prices. We find that integration has little effect on efficiency, but is associated with an increase in prices, especially when the integrated organization is exclusive and occurs in less competitive markets.

Does the Implementation of Responsibility Centers, Total Quality Management, and Physician Fee Programs Improve Hospital Efficiency?

This study evaluates whether the implementation of various types of hospital-physician integration strategies, such as the responsibility centers system, total quality management, and physician fee programs, enhance efficiency for Taiwan hospitals. Because hospitals in Taiwan are structurally similar to staff-model HMOs, the study has implications beyond Taiwan. The Data Envelopment Analysis model is applied to measure hospital efficiency. Hospital efficiency refers to the ability to produce more outputs (eg, ambulatory and emergency visits, inpatient days, and inpatient visits) with the same inputs (eg, physicians, nurses, ancillary labor, and hospital beds). The sample consists of 90 general hospitals in Taiwan from 1994 to 1996. In addition, multitobit regression analysis is used to simultaneously estimate the effects of the hospital-physician integration strategies and provide better control for the effect of other factors (eg, size, degree of competition, ownership structure, teaching status, and the change in regulatory regime) that may also affect hospital efficiency. When evaluating the hospital-physician integration strategies individually, hospitals that implemented the responsibility centers system, total quality management, and physician fee programs were more efficient than hospitals that did not. Controlling for other factors using the multitobit model, hospitals that implemented physician fee programs remained significantly more efficient than others. In addition, hospitals that implemented total quality management were more efficient when they had implemented the strategy for at least 2 years. Hospitals that implemented the responsibility centers system were more efficient but only when integrating the system with formal incentive schemes. Physician fee programs seem to provide the most direct and robust incentives to enhance hospital efficiency under a fee-for-service regime like that in Taiwan. Because of time-lagged effects, hospitals that implemented the total quality management programs were more efficient but only when the programs had been implemented for at least 2 years. The responsibility centers system can also be effective when the system was associated with formal incentive schemes. The results indicate the importance of having both the individual-based and team-based incentives in place. Finally, the hospital-physician integration strategies appear to be effective individually, but the results change significantly when they are evaluated simultaneously, together with other control variables, in the tobit model. This indicates the importance of investigating hospital-physician integration strategies as a portfolio instead of a single tool.

Successful physician-hospital integration in rural areas.

During the 1990s hospitals competed to acquire physician practices. Those competitive bidding wars could have pushed the price of practices beyond the value obtained by gaining influence over physicians. This paper examines how hospital location and competition for physician practices affects the profitability of physician-hospital integration in rural areas. Eight years of data covering 338 rural hospitals are used to test whether the acquisition of physician practices is more successful in more isolated, uncompetitive rural markets than in competitive rural markets. A hospital without a competitor within a 15-mile radius is deemed to operate in an uncompetitive market. Success is measured by shifts in admissions, lengths of stay, and overall profitability following the acquisition of a physician practice. Hospitals in uncompetitive rural markets that acquired practices showed decreased lengths of stay and increased admissions with no reduction in profitability. Hospitals in more competitive rural markets that acquired practices showed a decrease in profitability. Integration was a more profitable strategy for isolated rural hospitals than for hospitals with nearby competitors. Although further research is needed to determine if these results are due to the affect of competition on the cost of acquiring and operating practices, isolated rural hospitals should be open to the prospect of acquiring physician practices. Hospitals in competitive markets should be cautious about entering bidding wars for physician practices.

Why do rural primary care physicians sell their practices?

This study evaluates why rural primary care physicians sell their practices. A random sample of rural primary care practices in California, Utah, Ohio, Texas, and Virginia were surveyed to investigate changes in ownership of the practices during the period 1995-1998. These five states were selected because they represent areas with different experiences with physician-hospital integration and varied rates of managed care penetration. A series of logistic regressions were conducted to examine the factors that led independent physicians to sell their practices to either nonlocal buyers, local hospitals, or local physicians. Findings suggest that sales to nonlocal buyers represent the majority of practice ownership changes. The motivations for ceding control to nonlocal buyers center on managed care concerns, recruitment concerns, and administrative burdens. Sellers were also concerned about their level of net income prior to being acquired. However, the preacquisition financial concerns of sellers were not significantly stronger than the financial concerns of practices that remained independent. The environmental conditions that motivate rural physicians to sell their practices are not expected to improve. Therefore, additional sales of rural primary care practices to nonlocal buyers are expected. Further research is necessary to determine whether this shift in control will lead to changes in the quality or accessibility of care.

Integration mechanisms and hospital efficiency in integrated health care delivery systems.

This study analyzes integration mechanisms that affect system performances measured by indicators of efficiency in integrated delivery systems (IDSs) in the United States. The research question is, do integration mechanisms improve IDSs' efficiency in hospital care? American Hospital Association's Annual Survey (1998) and Dorenfest's Survey on Information Systems in Integrated Healthcare Delivery Systems (1998) were used to conduct the study, using IDS as the unit of analysis. A covariance structure equation model of the effects of system integration mechanisms on IDS performance was formulated and validated by an empirical examination of IDSs. The study sample includes 973 hospital-based integrated health care delivery systems operating in the United States, carried in the list of Dorenfests Survey on Information Systems in Integrated Health care Delivery Systems. The measurement indicators of system integration mechanisms are categorized into six related domains: informatic integration, case management, hybrid physician-hospital integration, forward integration, backward integration, and high tech medical services. The multivariate analysis reveals that integration mechanisms in system operation are positively correlated and positively affect IDSs' efficiency. The six domains of integration mechanisms account for 58.9% of the total variance in hospital performance. The service differentiation strategy such as having more high tech medical services have much stronger influences on efficiency than other integration mechanisms do. The beneficial effects of integration mechanisms have been realized in IDS performance. High efficiency in hospital care can be achieved by employing proper integration strategies in operations.

Is provider capitation working? Effects on physician-hospital integration and costs of care.

Capitation holds health providers fiscally responsible for the services they deliver or arrange and thus provides strong motivation for physicians and hospitals to integrate activities and reduce costs of care. The objective of this study was to assess 2 potential effects of capitation: (1) its effects on the integration of functional, financial, and clinical processes between hospitals and physicians and (2) its effects, in conjunction with process integration, on hospital costs. We studied a 1995 American Hospital Association (AHA) special survey that has information on 44 different physician-hospital integrative activities and on global capitation contracts held by management service organizations, physician-hospital organizations, and other similar entities. These data were combined with the AHA's Annual Survey of Hospitals, InterStudy HMO data, the area resource file, and state regulation data. Multivariate analysis was used to assess the relationship between capitation and integration and then to examine the influence of these factors and others on hospital costs. We studied 319 urban hospitals with complete data. Provider capitation was found to promote integration between hospitals and physicians in relation to administrative/practice management, physician financial risk sharing, joint ventures to create new services, computer linkages, and an overall measure of physician-hospital integration. However, anticipated effects of integration and capitation on hospital costs were not evident. Global capitation is motivating tighter integration between physicians and hospitals in a number of respects. Although capitation is currently having the intermediate effect of encouraging process integration, it is not yet having the ultimate anticipated effect of lowering hospital costs.

Assessing the Extent of Integration Achieved Through Physician-Hospital Arrangements

In this article we examine management service organizations (MSOs), physician-hospital organizations (PHOs), hospital-affiliated independent practice associations (IPAs), and hospital-sponsored "group practices without walls" (GPWWs) that allow physicians to retain their practices and link hospitals and health systems to physicians through contractual arrangements. Also examined were medical foundations (MFs), integrated salary models (ISMs), and integrated health organizations (IHOs) that own the physical assets of physician practices and contract with payors for physician and hospital services. The research provides several new insights for understanding the structure and process of physician-hospital integration. It was found that the extent of processual integration in physician-hospital organizational arrangements can be measured along six dimensions: administrative and practice management services; physician financial risk-sharing; joint ventures to create new services; computer linkages; physician involvement in strategic planning; and salaried physician arrangements. These dimensions are consistent with the conceptual and empirical dimensions developed by others. These findings refute the notion raised by some industry observers that the new physician-hospital organizational models simply formalize integrative activities already in place. Earlier studies from the 1980s reported that hospitals integrated physicians through involvement in governance, capital planning, and the provision of practice management services. In contrast, we found that current integration.

Physician-Hospital Integration Strategies: Impact on Physician Involvement in Hospital Governance

Health Care Management Review (HCMR) disseminates state-of-the-art knowledge about management, leadership, and administration of health care systems, organizations, and agencies. Multidisciplinary and international in scope, articles present completed research relevant to health care management, leadership, and administration, as well report on rigorous evaluations of health care management innovations, or provide a synthesis of prior research that results in evidence-based health care management practice recommendations. Articles are theory-driven and translate findings into implications and recommendations for health care administrators, researchers, and faculty. Annually, HCMR publishes the Best Theory to Practice paper chosen by the Health Care Administration Division of the Academy of Management.

Physician-hospital integration strategies: impact on physician involvement in hospital governance.

This study investigated the impact of three physician-hospital contractual arrangements (PHCAs)--joint ventures, management service organizations, and not-for-profit foundations--on physician involvement in hospital governance and physician-hospital relationships. Analysis of data collected from a national sample of 1,013 hospitals revealed that PHCAs generate greater physician involvement in hospital decision making and result in lower physician-hospital conflict.