Dive Brief:
- Patients were “steered” toward more costly care services in health systems, including increased specialist visits, emergency department visits and hospitalizations, after large health systems took over ownership of primary care practices, according to a study published in JAMA Health Forum last week.
- Vertical consolidation, or when physicians and health systems join through ownership or affiliations, was associated with increased medical spend, but not with decreased readmission rates.
- Policymakers and regulators may need to consider adopting “a portfolio of countermeasures” to limit the impact of rising care costs as vertical healthcare consolidation becomes increasingly common in the U.S., the study noted.
Dive Insight:
Independent physician practices have increasingly become a novelty in the U.S. as large health systems, private equity firms and payers acquire primary care practices.
Consolidation may benefit PCP practices if health systems help providers negotiate higher reimbursement rates with payers or create operational and administrative efficiencies.
The JAMA study outlined possible patient benefits from acquisitions, including enhanced care coordination and communication between physicians and hospitals, which could decrease the need for duplicative tests.
However, in an analysis of more than four million care observations in Massachusetts between 2013 and 2017, the study found that vertical consolidation was associated with more visits to specialists, higher costs and no evidence of higher quality care, as patients had similar readmission levels.
“The finding of no change in patient readmissions might suggest limited gains from increased coordination,” researchers noted. Previous research, the study noted, has found similar trends. “Overall, vertical relationships appeared to be no panacea to health care access or coordination.”
The study urged stakeholders to consider countermeasures that might limit the impact of mergers on cost of care, including adoption of transparency and patient-steering tools that encourage patients to seek care from lower-cost physicians and hospitals, or alternative payment models that reward use of lower-priced care.
Regulators have recently been targeting healthcare consolidation. In July, federal antitrust agencies proposed merger guidance updates. If passed, vertical mergers will not be allowed to create anticompetitive market structures and regulators would scrutinize vertical deals even when the merging companies have below a 50% market share.
