Hospital/Physician Integration, Quality & Costs

As we all know by now, hospitals have dramatically increased employment of physicians and ownership of physician practices over the last decade.  The rationale is supposed better care integration, resulting in better cost and quality outcomes.  New research in the Annals of Internal Medicine examines whether these benefits are actually occurring.   (Annals Article)   The researchers used data from 2002 and 2013 on mortality, readmissions, length of stay and patient experience in regard to Medicare readmissions to see if there were correlations with level of physician employment.  Hospitals were put in one of three categories, employing physicians, having a contractual relationship with physicians, or having no affiliation with doctors.  They plotted changes in such status over the study period and the characteristics of hospitals which changed categories.  In 2003, 44% of hospitals were in the unaffiliated category, 29% said they employed physicians, and 27% said they had some contractual relationship with doctors.  By 2012, 42% said they had an employment relationship, 38% had no relationship and 19% had some contractual arrangement with doctors.  About 800 hospitals switched to employing physicians over this period.  They tended to be large, major teaching and non-profit facilities.

Comparing hospitals that switched to employing doctors to those that didn’t, for a two-year period prior to the switch and two years after it occurred, there were no changes associated with employing doctors in any of the primary quality outcomes–mortality, readmissions, length of stay or patient satisfaction.  This is pretty powerful and comprehensive debunking of the supposed quality rationale for hospitals employing doctors.  I think we all can acknowledge that the real reason hospitals have been employing and acquiring physicians is because they think they will generate more revenue and profit by doing so.  Now that motivation may not preclude there also being a quality benefit.  But given the predominant motivation, it is not at all likely that costs will be lower and the research not only confirms that, but suggests that so far, any quality improvements have been elusive.  Given that, it is time for regulators to not only ban such practices, but force reversal of them, since it is clear that they have driven prices and spending up.