Health care consolidation pushes up costs, but not quality

When physicians, hospitals and other health care providers consolidate, patient prices and cost of delivering care tend to go up, but quality of care does not necessarily follow.

Researchers examined 37 studies of the effects of mergers and acquisitions from 2000 to 2023. They found horizontal and vertical integration in health care did not lead to improvements for health care finances or patient outcomes.

“Proponents of health care integration have claimed it controls costs and enhances care quality,” study lead author Bhagwan Satiani, MD, MBA, FACS, said in an accompanying news release. Satiani is professor of surgery emeritus at The Ohio State University Wexner Medical Center in Columbus, Ohio.

“But we found that evidence is lacking that integration alone is an effective strategy for improving the value of health care delivery,” Satiani said. “These findings provide an opportunity to better define value with a focus on benefiting patients while balancing the financial stability of the health care industry. Quality improvement in health care cannot be achieved by mergers and acquisitions alone.”

Consolidation across the land

The last 20 years have seen an increase “corporatization” of health care. By 2021, the top 40 largest health systems owned 2,073 of 6,129 American hospitals. From 2000 to 2020, health systems increased ownership of hospital beds from 58% to 81% as health care markets without an independent hospital grew from 7% to 25%, the study said.

In that environment of health care integration, the researchers looked for evidence that the business models led to advances in value by:

• Reducing the prices of health care, defined by consumer costs per hospital admission
• Lowering costs of delivery, defined as spending per patient
• Improving quality of care, measured by patient outcomes or care management processes (CMPs)

What happened

Among the 37 relevant studies:

• 20 (54%) found net negative findings for patient costs or spending
• Nine (24%) suggested integration did little to affect spending, patient prices or quality
• Eight (22%) had positive findings

There were 26 studies that analyzed effects on quality of care and CMPs, and 20 (77%) of those found either no change or a decrease in quality. For cost or spending of delivery, nine of 16 articles documented increases due to integration; two found decreases, and four logged no changes. Among 14 articles that examined prices to consumers, 13 found patient costs went up, the study said.

Loss of the independents

The study posted more evidence of the decline of independent physicians managing their practices. The researchers discussed vertical integration (VI) and the model of hospitals or health care systems acquiring physician-owned practices or employing independent physicians. That type of VI grew from 20% in 2002 to 52% in 2008 to 63% in 2016, the study said.

“Several factors such as prospective diagnosis related group payments, capitation models, technologic advancements, market forces, bundling of several chronic diseases for the Medicare population and value-based (VB) payment models further hastened the move of physician practices toward VI,” the study said.

Some researchers believe the Affordable Care Act “accelerated VI due to emphasis on better access to care, management along the care continuum, and movement to electronic medical records; factors which promoted large hospital acquisition of smaller hospitals and physician-owned practices,” the study said.

Will physicians lead?

The study noted a limitation is the lack of transparency in health care price and ownership. The relevant studies do not use consistent definitions, measurements and criteria for their authors’ conclusions. While there were few, if any, leaps forward in patient care, the researchers noted “not all M&A (merger and acquisition) activity and models were shown to be detrimental to patients.”

There also is an opportunity for physician leadership.

“While there is enough evidence that physician executives achieve better efficiency and quality outcomes when leading health care organizations, this requires leadership and management competencies encompassing systems thinking, self-awareness, self-management, social awareness, and relationship management domains,” the study said. “Leadership training programs for physicians, both intramural and by professional societies, emphasizing these competencies provide the essential skills for advancing to management roles to lead our health systems into the future.”

Speaking to surgeons

“Systematic Review of Integration Strategies Across the U.S. Healthcare System: Assessment of Price, Cost, and Quality of Care,” was published in the Journal of the American College of Surgeons. Few of the studies involved were systematic reviews, which are intended to reduce bias, Satiani said. Health policy and economic reviews publish studies about health care consolidation, but he noted that data does not necessarily reach surgeons, even though surgical services account for approximately one-third of U.S. health care expenditures. Co-authors were David Way, MEd; David Hoyt, MD, FACS; and E. Christopher Ellison, MD, FACS.