A recent Harvard University study highlights the impact of vertical relationships between primary care physicians (PCPs) and healthcare systems, revealing that such connections often lead to increased specialist visits and higher medical expenditures. While these relationships can improve coordination and access to specialists, they may also drive up costs. Researchers suggest a combination of strategies, including antitrust measures and alternative payment models, to mitigate potential downsides. The study sheds light on the evolving landscape of physician integration into healthcare systems, a trend influenced by various factors, including the quest for greater negotiating power and resource access.
A recent study conducted at Harvard University has established a connection between the collaborative arrangements between primary care physicians (PCPs) and healthcare systems and a phenomenon known as “steering.” Steering involves PCPs directing patients toward specialists and other healthcare providers within the same healthcare system. Researchers have discovered that this steering practice leads to increased utilization and higher spending on patient care.
This study, published in the JAMA Health Forum, scrutinized over 4 million cases involving patients with commercial insurance in Massachusetts. It compared the outcomes of patients treated by PCPs who had recently formed vertical relationships with healthcare systems through ownership, joint contracts, or affiliations, with those treated by PCPs who did not have such vertical associations or were already employed by a healthcare system at that time.
The findings revealed a noteworthy correlation between vertical relationships between PCPs and healthcare systems and a 22.64 percent rise in specialist visits per patient year. Furthermore, there was an increase of $356.67 in total medical expenses per patient year, marking a 6.26 percent hike compared to the other group.
Within the healthcare system to which the PCPs were aligned, there was a 29.83 percent rise in the number of specialist visits, a 14.19 percent increase in emergency department visits per patient year, and a 22.36 percent surge in hospitalizations compared to the control group.
Interestingly, there was no difference in readmission rates between PCPs with newly established integrated relationships and other physicians under investigation.
The study’s authors expressed concerns that the steering of care might result in insurers paying more for similar types of care visits, potentially leading to overall higher costs. They also noted that vertical relationships seemed to lead to increased specialist visits within large healthcare systems, prompting further investigation to determine whether these visits represent low-value care or improved access to specialists.
The researchers acknowledged that steering is not necessarily associated with lower-quality care. It could enhance coordination, such as through shared medical records, and reduce redundancy in care delivery within a healthcare system, potentially resulting in higher quality and cost savings.
The results also hint at the possibility of improved access to specialists when PCPs are part of a healthcare system.
However, the lack of significant differences in readmission outcomes between the two groups suggests limited benefits or gains from increased care coordination. Additionally, previous studies have not found changes in process measures, quality, or hospital-level outcomes following vertical integration.
In summary, the study suggests that vertical relationships may not offer a comprehensive solution to healthcare access or coordination challenges. The authors propose a combination of measures to mitigate the potential negative effects of vertical relationships on the overall cost of care. These measures include antitrust enforcement, the adoption of transparency and patient steering tools to encourage patients to seek care from lower-cost providers, and alternative payment models that incentivize the use of more cost-effective care.
According to data from the American Medical Association (AMA), the number of physicians transitioning from independent practices to hospitals and healthcare systems has doubled over the past decade. This shift is driven by physicians seeking increased bargaining power in negotiations with commercial payers, as well as the need to access valuable resources and better manage regulatory and administrative requirements.
While vertical integration may offer certain benefits depending on the nature of the relationship between physicians and healthcare systems and the financial incentives involved, its impact on the quality of care and costs remains a topic of ongoing study and debate.
