Ho Hosp spit ital l Acq Acquis uisit itio ion n of of Phy Physic sician n Pr Prac acti tice ces: : High Higher er Value alue or or High Higher er Cos Costs ts? Cen Cente ter r on Health th Car Care Ef Effectiv tiveness Po Policy Foru rum Ma Math thema matic tica Po Policy Resea Researc rch Wa Washingto ton, DC DC November 12, 2015
About the Center on Health Care Effectiveness The Center on Health Care Effectiveness (CHCE) conducts and disseminates research and policy analyses that support better decisions at the point of care. Our focus is on the delivery systems and policy environments that help clinicians and patients make more informed decisions, using information on outcomes and effectiveness. For more information about CHCE, visit http://chce.mathematica-mpr.com/ 2
Moderator Ann O’Malley Deputy Director, Center on Health Care Effectiveness Mathematica Policy Research 3
Today’s Speakers James Reschovsky Michael McWilliams Mathematica Harvard Medical School Stuart Guterman Craig Schneider Eugene Rich AcademyHealth Mathematica Mathematica 4
Reasons for Hospital Employment Hospital Perspective Physician Perspective • Fear of being “squeezed out of the • Increase market share and referrals for: market” in highly consolidated hospital – Inpatient admissions markets – Lucrative tests • Rising overhead but flat reimbursement – Procedures by their specialists • Implementation of health information • Greater leverage with health plans on technology and meaningful use prices • Malpractice premiums • Eye toward the future • Work-life balance – Accountable care organizations (ACOs) • Help navigating complex changes in – Bundled payment delivery system, reporting and alternative – Penalties for readmissions payment models: ACOs, reporting on quality metrics etc. (and in the future MACRA, MIPS, etc.) O'Malley AS, Bond AM, Berenson RA. Rising hospital employment of physicians: better quality, higher costs? Issue Brief, Center for Studying Health System Change, 2011. http://www.hschange.com/CONTENT/1230/ 5
Opportunities & Risks of Hospital Employment of Physicians Opportunities Risks • FFS still hinders coordination of care • Economies of scale • Access can shift markedly for patients • Influence over physicians’ actions if hospital drops a plan network (for example, Medicaid) • Theoretically, it can establish • Potential for higher costs structure for better care integration – Increases leverage over plans on • One-stop shopping for patients payment rates – Exacerbates pressure to increase volume under FFS model – Facility fees for office visits • Demise of independent small practices — which still serve a lot of people and rep about 50-60% of practicing physicians 6
Policy Implications • Greater hospital employment of physicians does not mean that clinical integration will naturally follow • Risks raising costs without improving quality, unless broader payment reform incentivizes coordination of patient care 7
J. Michael McWilliams, MD, PhD Department of Health Care Policy, Harvard Medical School Division of General Medicine, Brigham and Women’s Hospital Mathematica Policy Research November 12, 2015 8
Increasing Understudied: effects so far on prices, utilization, and quality unclear May accelerate under new payment models Concern that price effects will offset gains from new payment models (APMs) 9
Yes Potential efficiencies from ownership • Care coordination • Greater influence over physician behavior • Lower transaction costs • Other economies of scale or scope Strategy/survival • Acquisition of primary care practices to preserve market share 10
No Efficiencies questionable • Reduced incentives to achieve efficiencies • Diseconomies of scale or scope (internal politics) Reasons for integration under FFS • Increase admissions, referrals for HOPD services • Bargaining power • Economies of scale or scope • Higher payments 11
1. Effects of recent vertical integration on inpatient and outpatient prices and utilization 2. Performance differences between vertically integrated organizations and independent physician groups in Medicare ACO programs 3. Relationship between ACO contracting and vertical integration 12
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Study period: 2008-2012 Data: • Truven Health MarketScan Commercial Database • To measure spending and utilization at patient level • Does not contain provider IDs • Medicare claims • To measure physician-hospital integration at MSA level Population: 7.4M PPO/POS enrollees • 240 MSAs where Medicare billing substantial and MarketScan covered >15% of PPO population • Enrollees in MarketScan in 2008 and 2012 14
Physician-hospital integration • % of MSA’s NPIs billing in hospital -owned facilities • Based on place of service codes • Captures HOPD employment and off campus acquisitions • Misses some acquisitions and looser contracting arrangements Concentration measures (HHIs) • Physician: Medicare, TIN share of outpatient care • Hospital: AHA, system-adjusted admissions share • Insurer: HealthLeaders InterStudy, enrollment share 15
Spending and utilization • Inpatient and outpatient spending • Utilization = service counts x mean prices • Implied price effect (Spending = P x Q) Covariates • MSA-level • Rates of unemployment, poverty, age >65 • Physicians and beds per capita • Patient-level • Age, sex • Verisk Health DxCG risk score • Plan-level cost-sharing 16
Modeled spending/utilization as function of: ◦ Year (2008 vs. 2012) and MSA fixed effects ◦ Physician-hospital integration ◦ Physician, hospital, insurer market concentration ◦ Covariates Focus on physician-hospital integration and physician market concentration Estimated expected effects for MSA exhibiting a change at the 75 th percentile of changes Analysis of hospital-owned vs office price differentials: was market power a mediator? 17
Chang nge from 2008 2008-20 2012, , Study udy Year, , Mean Mean P P value ue Below w Medi dian an Above Medi dian an MSA-level evel Char aract acter erist stic 2008 2008 2012 2012 P-H H P-H H Integ egrati ation Integ egrati ation Physician-hospital integration, 18.0 21.3 -0.1 6.8 <.001 % Physician HHI 675 726 54 49 0.86 Hospital HHI 3962 4143 127 234 0.14 Insurance HHI 2441 2386 -52 -58 0.95 % unemployed 5.7 7.8 2.3 2.1 0.20 % in poverty 13.1 15.7 2.6 2.6 0.81 % age ≥ 65y 12.9 14.0 1.1 1.0 0.82 Physicians/1000 persons 2.79 2.87 0.08 0.07 0.59 Hospital beds per 1000 2.88 2.75 -0.12 -0.15 0.51 persons Mean DxCG Risk Score 0.69 1.18 0.46 0.44 0.30 Mean outpatient OOP payment, 29.23 34.44 4.99 4.35 0.44 $ Mean inpatient OOP payment, $ 605.55 796.92 203.24 200.55 0.88 Neprash, Chernew, Hicks, Gibson, & McWilliams. JAMA Intern Med 2015 18
120 100 n ($) ion ** P<.001 $75 atio ** 80 izat nding or Utiliz 60 l Spending 40 $22 $14 20 $10 ual Annua 0 Outpatient Inpatient -20 Mean: $2407 $872 Spending Neprash, Chernew, Hicks, Gibson, & McWilliams. JAMA Intern Med 2015 19
250 ial in 2012 ($) 200 ntial 150 rent fere Average MarketScan Price Differential ce Diffe 100 Price Average Medicare Price Differential 50 0 ← MSAs ranked from smallest to largest price differential in MarketScan → MarketScan Price Differential Neprash, Chernew, Hicks, Gibson, & McWilliams. JAMA Intern Med 2015 20
60 50 n ($) 40 ion atio 30 izat $19 nding or Utiliz 20 $11 10 $0 l Spending 0 -10 -$5 ual -20 Annua -30 Outpatient Inpatient -40 Spending Neprash, Chernew, Hicks, Gibson, & McWilliams. JAMA Intern Med 2015 21
P value e for test st of Finan ancial ial integr gration ation between differ eren ence ce hospitals itals and physic ician ian groups ps between tween ACO Yes (16) subgrou roups No (16) 0.83 Baselin line spendin ing in ACO servic ice area Higher (16) Lower (16) 0.04 Baselin line spendin ing g in ACO Above local average (16) Below local average (16) 0.048 Droppe ped out Yes (13) No (19) 0.75 -100 -50 0 50 Diffe fere rent ntial ial chang nge in quart rterly rly spendin nding per r benefi ficiary iary ($) McWilliams, Chernew, Landon, & Schwartz. NEJM 2015 22
35% al- ital icing in Hospit 30% ies ilitie 25% ians Practicing d Facili owned 20% sicians % of Physic 15% 10% 2008 2009 2010 2011 2012 Lowest Q2 Q3 Highest MSA-lev evel el ACO Pen enet etrati tion on 2013 23
Vertical integration associated with higher prices with no evidence of efficiencies under FFS or APMs (at least not yet) Not clear that integration is accelerating under payment reform (at least not yet), but clear that it is increasing Not a reason to abandon payment reforms Need parallel policies to keep markets competitive and limit mark ups More competitive hospital markets may be key 24
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