Independent physicians ‘are a viable alternative to hospitals' for patient outcomes, lower health care costs, study says

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Patients generally experienced better outcomes at a lower cost when independent physicians guided their treatments around one of the largest metropolitan markets in the nation, according to a new study.

Duly Health and Care announced the results of “Chicago provider market trends: Key considerations for employers,” a new study by Avalere Health to examine medicine and the business of health in the Windy City.

A review of primary care, cardiology, gastroenterology, oncology, orthopedics and urology specialties found Medicare fee-for-service spending per patient was lower than spending per beneficiary of hospital-affiliated physicians. As for patient outcomes, those working with Duly physicians had fewer inpatient days, fewer emergency department visits, and lower all-cause readmission rates. They also had more follow-up visits within 14 days of discharge, compared with beneficiaries treated by hospital-affiliated doctors, according to the report.

"This study provides hard evidence to support what we see every day at Duly," said practice Chief Physician Executive and Chairman Paul Merrick, MD, a urologist. "Independent physicians provide more personalized, more efficient care at lower cost than their hospital-affiliated peers."

Duly Health and Care describes itself as “the largest independent, multi-specialty physician-directed medical group in the Midwest,” with more than 900 physicians and more than 6,000 other clinicians working in more than 150 locations around the Chicago area. It is based in Downers Grove, Illinois.

The Avalere report noted the findings were specific to the Chicago market. But other markets may be experiencing similar rises in costs due to physician and health care consolidation. So, the intention to highlight differences between care patterns and outcomes between hospital-affiliated physicians and community-based alternatives may be applied to other markets, according to Duly Health and Care.

"Employers and families across Chicagoland are struggling with rising health care costs, and the inflated cost of care delivered in hospital systems continues to be a major driver," said Duly Health and Care CEO Dan Greenleaf said in the news release. "This new research shows that independent physician practices like Duly are a viable alternative to hospitals, offering better care and better patient outcomes at lower cost."

Is Medicare saving money?

The 2023 results for Duly Health and Care patient total Medicare expenditures, compared with hospital-affiliated doctors, were:

• $19,264 for primary care, 26% lower than $26,046 for hospital-affiliated doctors
• $30,002 for cardiology, or 23% lower than $38,947 for hospital-affiliated doctors
• $29,982, for gastroenterology, or 17% lower than $36,172 for hospital-affiliated doctors
• $41,178 for oncology, or 32% lower than $60,689 for hospital-affiliated doctors
• $19,456 for orthopedics, or 27% lower than $26,525 for hospital-affiliated doctors
• $24,043 for urology, or 24% lower than $31,649 for hospital-affiliated doctors

Hospital services tend to be more expensive than care in clinics, physician offices and at home, and tend to be favored by hospital-affiliated physicians, making hospital care a key driver for Chicago Medicare fee-for-service beneficiaries, the study said.

Duly Health and Care generally topped hospital-based treatment for patient in-patient days, emergency department visits, readmission rates within 30 days of discharge, and follow-up visits within 14 days of discharge. The exception was for cancer care, with patients of hospital-affiliated physicians spending almost an entire extra day in the hospital, compared with Duly Health and Care patients.

“Notably, in every comparison where the results were statistically significant … Duly outperformed hospitals in the Chicago market,” the study said.

“Together, the Medicare expenditures data and the quality outcomes metrics demonstrate the financial and clinical advantage that community-based groups can offer over hospitals,” the study said.

Is the Chicago market unique?

The study included a summary of national conditions that probably aren’t a surprise to physicians, other clinicians, and health care industry observers. Nationally, medical care prices have increased at a rate faster than inflation since 2000, and health insurance costs increased by almost 50% from 2013 to 2023. The costs have consequences for employers and workers. Companies face unsustainable costs for worker health, and when health care costs are too high, people postpone it or avoid it.

The Illinois market has shown similar growth rates, the report said.

Consolidation has prompted concerns nationally, and Chicago is no different. Since 2018, there have been three large hospital mergers. The city remains home to 33 health systems and at first glance appears to be an unconcentrated market. But the study noted that measurement, known as the Herfindahl-Hirschman Index level, rates the number of providers, but not concentration in the type of provider.

“Community-based care provides a viable alternative to hospital dominance,” the study said. “Private practice groups, such as Duly, offer a lower-cost alternative to hospital care while achieving better performance on quality metrics and improved patient outcomes.”

Where are the doctors?

Chicago has a higher proportion of specialists affiliated with hospital systems — 58%, compared with 45% nationally, across five specialties. Among gastroenterologists, 65% in the Chicago market are affiliated with hospitals, compared with 32% nationwide. Cardiologists (77%) and oncologists (71%) had the greatest amounts of physicians affiliated with hospitals.

For insurers, the Health Care Service Corp. dominates the city with 75% of the individual market and 80% of the group market, the report said. Large, self-insured employers also likely shape the market conditions, though that needs additional study, the report said.

Where do patients go for care?

The study has sub-analyses dedicated to coordinated care and to services that are:

• High-spend categories, such as GI and musculoskeletal care, including total joint replacements
• Frequently and safely performed in low-cost settings, such as imaging
• Critical for health and wellness of an employed populations, such as screening mammograms

As of 2024, Chicago-area patients used hospital settings for their preventive screenings, joint replacements and imaging, all at rates consistently higher than national utilization. That inflated employer costs in GI and musculoskeletal care.

In 2024, colonoscopies were about 20% more likely to be performed in a hospital — at a cost of $2,159, compared with a $577 price tag at a doctor’s office visit. The price at ambulatory surgical centers fell in between at $1,345, according to the study.

Medical imaging was predominantly performed in hospital settings (70%), and at higher prices. A bilateral mammogram cost $343 in the hospital outpatient department (HOPD), more than the $222 price at a physician’s office, the study said.

As for coordinating care, Medicare beneficiaries receiving both primary and specialty gastroenterology care from Duly Health and Care had an additional 36% in savings, more than $17,000 per patient per year, compared to patients under the care of hospital-affiliated physicians.