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Health care consolidation not producing expected benefits

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Hospital systems see far higher costs, modestly better quality than independents

As hospitals and medical practices have consolidated into large, integrated systems in recent decades, proponents of this trend argued that it would result in better patient care at lower prices. But health care consolidation has not brought the hoped-for cost savings or improvements in care quality, according to results of a new study.

The study from Harvard University and the National Bureau of Economic Research sets out to answer the question, “Is the quality and cost of health care delivered in systems better, worse, or the same as the quality and cost of health care delivered outside systems?”

To find out, the authors looked at care quality for, and spending on Medicare beneficiaries at 580 health systems, comprising 40% of the nation’s physicians and 84% of general acute care hospital beds in 2018. Academic and large nonprofit systems accounted for 80% of system physicians and 64% of system hospital beds.

They compared the quality of chronic and preventive care, mortality, hospital readmissions, patient experience, utilization of low-value care and spending for patients attributed to both system and nonsystem physicians. Data for the study came from 25 sources including Medicare and commercial claims, Internal Revenue Service filings and Centers for Medicare & Medicaid Services administrative data.

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The results showed that performance on measures of preventive care, clinical quality and patient experience was slightly better for health system physicians and hospitals than those not part of a system. On the other hand, system physicians were paid between 12% and 26% more than their non-system counterparts, while system hospitals received 31% more for their services than non-system hospitals.

 “One of the key arguments for hospital mergers and practice acquisition was that health systems would deliver better-value care for patients,” Nancy Beaulieu, Ph.D., the study’s lead author and a research associate in the Blavatnik Institute at Harvard Medical School said in an accompanying press release. “This study provides the most comprehensive evidence yet that this isn’t happening.”

“There’s no question that large, sophisticated health systems have benefits over independent systems,” added David Cutler, Ph.D., a study co-author and professor of applied economics at Harvard. “Big systems tend to be less vulnerable to economic downturns and they can provide specialized care that would be difficult to maintain in smaller systems. But the hoped-for cost savings benefits of integrated health systems have not yet materialized.”

The study, “Organization and Performance of US Health Systems” appears in the January 24/31 issue of JAMA.


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