The prevailing view is that consolidation of health care providers does not improve quality and leads to higher prices. But it’s important to acknowledge that that conclusion may be driven in large part from work on hospital mergers. Other forms of integration may, in fact, be quality increasing.
Unfortunately, there’s not a lot of work on other forms of integration, like hospitals acquiring physician practices or hospitals offering insurance products. Colleagues and I did find higher quality associated with hospital-health plan integration, though also higher prices. (To my knowledge, ours is the only paper to examine this type of integration.)
A recent paper by Caroline Carlin, Bryan Dowd, and Roger Feldman* examines changes in quality associated with hospitals acquisition of multispecialty clinics:
In their recent review of the empirical literature examining the impact of integrated delivery systems on cost and quality of care, Hwang et al. (2013) found only four peer-reviewed studies (Shortell et al. 2005; Mehrotra, Epstein, and Rosenthal 2006; Rittenhouse et al. 2010; Weeks et al. 2010) that examined the link between clinic ownership, or clinic size and structure, and quality of care. Mehrotra, Epstein, and Rosenthal (2006) compared horizontally integrated medical groups (IMGs) with the more decentralized independent physician associations, finding that IMGs provided higher levels of preventive care screening. Rittenhouse et al. (2010) found that physician practices owned by a hospital or health maintenance organization were more likely to use evidence-based care management processes. Shortell et al. (2005) found that medical groups affiliated with a hospital or health plan were significantly more likely to be in the top quartile of care management and health promotion indices. Finally, Weeks et al. (2010) compared the care received by Medicare patients in large multispecialty groups affiliated with the Council of Accountable Physician Practices (CAPP), a consortium of 27 large group practices, against care delivered by other practices in the same markets. They found that patients assigned to the CAPP practices received higher levels of evidencebased care. […]
We examined changes in quality of care measures in three large, multispecialty clinics that were acquired by two hospital-owned IDSs [integrated delivery systems] in the Minneapolis–St. Paul area. We compared changes in quality indicators for the acquired clinics to nine control groups, using a differences-in-differences model. While the acquisition effects were small and, at least in these early postacquisition years, limited to cancer screening and appropriateness of ED use, our results suggest that integration of a clinic system into an IDS has the potential to improve quality of care. However, we also found an increased probability of ACS [ambulatory care sensitive] admissions when the acquisition caused disruption to existing physician–hospital admitting relations.
This body of work is still not very large — and not all studies use particularly strong methods — so I don’t think we should confidently conclude that all manner of integration apart from hospital mergers is quality enhancing. Still, it does seem that the literature to date is leaning that way (discounting publication bias as well). Note that even if this is so, it does not imply that quality cannot be enhanced without integration. Additionally, examination of prices is important as integration of any type can increase market power.
* Disclosure: I have worked with Roger in the recent past. Bryan is a longtime colleague.
