One strain of thought regarding improvement in health outcomes was that smaller physician practices lacked the resources to be devoted to quality improvement and population health management and so had worse outcomes for their patients. Under this theory, all the consolidation of physicians into larger health systems or group practices would both improve quality and reduce spending. Yeah, right. Research published in Health Services Research kind of busts that idea. (HSR Article) The authors looked for an association between practice characteristics and outcomes for Medicare beneficiaries, including sub-categories of beneficiaries grouped by perceived medical need. In addition to primary care practices, specialty practices that tend to provide ongoing care to patients with chronic diseases were included in the study. Practices were surveyed on their quality improvement, health information and other processes. Medicare spending per patient, 30-day hospital readmissions and ambulatory care-sensitive hospitalizations were the outcomes studied, using 2012 Medicare data. There were 6 categories of practice size and type of ownership was also a variable. Each practice was given a score relating to the sophistication of its processes.
Practices with under 10 doctors comprised 75% of all practices, but 62% of beneficiaries were attributed to practices with 100 or more physicians. 67% of practices were physician-owned, 22% hospital-owned and 10% were community health centers. Smaller practices tended to have higher percentages of more complex patients. The largest practices had much higher Medicare spending per patient, especially for the patient group with greater medical needs. These practices spent almost $1900 more per year per high need beneficiary than the average spending for the smallest practices. The second-largest category of practice, those with 50 to 99 doctors, also had an over $1800 greater annual spend. Much of this extra spending was for physician services. Is there any possibility that this could be because larger practices put more pressure on physicians to generate more revenue? There was no significant difference in spending for any beneficiary category between physician-owned and hospital-owned practices, but physician-owned ones did tend to have higher physician spending and lower hospital costs. Community health centers had lower average annual spending. Practices with 1 to 2 physicians actually had the lowest readmission rates. Practice ownership was not associated with readmissions, nor were process scores. There were no associations between practice characteristics and ambulatory care sensitive admissions. The study results suggest there has been absolutely no benefit from physician consolidation into larger practices and whatever greater resources may exist in those practices don’t appear to affect cost or quality outcomes.