Hospital-Owned vs. Physician-Owned Physician Organizations

JAMA is chock full of great papers this week. “Total Expenditures per Patient in Hospital-Owned and Physician-Owned Physician Organizations in California“:

Importance  Hospitals are rapidly acquiring medical groups and physician practices. This consolidation may foster cooperation and thereby reduce expenditures, but also may lead to higher expenditures through greater use of hospital-based ambulatory services and through greater hospital pricing leverage against health insurers.

Objective  To determine whether total expenditures per patient were higher in physician organizations (integrated medical groups and independent practice associations) owned by local hospitals or multihospital systems compared with groups owned by participating physicians.

Design and Setting  Data were obtained on total expenditures for the care provided to 4.5 million patients treated by integrated medical groups and independent practice associations in California between 2009 and 2012. The patients were covered by commercial health maintenance organization (HMO) insurance and the data did not include patients covered by commercial preferred provider organization (PPO) insurance, Medicare, or Medicaid.

Main Outcomes and Measures  Total expenditures per patient annually, measured in terms of what insurers paid to the physician organizations for professional services, to hospitals for inpatient and outpatient procedures, to clinical laboratories for diagnostic tests, and to pharmaceutical manufacturers for drugs and biologics.

Exposures  Annual expenditures per patient were compared after adjusting for patient illness burden, geographic input costs, and organizational characteristics.

The gist of this was that researchers wanted to see what expenditures were per patient in physician-owned groups versus hospital-owned groups. They adjusted for patient health, geography, and other organizational characteristics.

Physician-owned groups had expenditures of $3066 per patient, versus $4312 in hospital-owned groups. Groups owned by multihospital systems had expenditures of $4776. Even after adjust for other factors, the difference between expenditures remained significant ($435 more for hospital-owned groups and $704 more for multihospital-owned groups).

Consolidation seems to be the trend of the day. Do with this what you will.


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