Nursing costs more in consolidated healthcare systems

Newswise – Healthcare integration has long been touted as a panacea to reduce healthcare costs and improve the quality of care.

But integrated health systems appear to be failing on both fronts, according to the findings of a new nationwide study led by researchers at Harvard and the National Bureau of Economic Research (NO.).

Instead, the analysis finds slightly better care at significantly higher costs for patients in healthcare systems compared to patients in independent practices or hospitals.

The results of the study are published in JAMA on January 24th.

Over the past few decades, healthcare systems in the United States have grown exponentially in size and market share through mergers and acquisitions of physician offices and hospitals and the merging of separate healthcare systems.

During those years, advocates of consolidation have argued that physicians and hospitals working together in integrated, coordinated systems would not only provide better patient care, but would do so more efficiently than independent physician offices and hospitals, thereby increasing the quality of care and reducing spending be lowered stably and even lowers the cost.

“One of the main arguments for hospital mergers and practice acquisitions was that healthcare systems would provide better care to patients. This study provides the most comprehensive evidence to date that this is not the case,” said study lead author Nancy Beaulieu, a research fellow in the Department of Health Policy at Harvard Medical School’s Blavatnik Institute.

Today, these systems are responsible for a large portion of medical care in the United States. Some of them employ thousands of doctors, while others are much smaller and rooted in local communities. But questions about how much care is provided by such systems, or how well that care compares to care outside of systems, remained unanswered.

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Despite their impact on population health and the economy, little is known about the actual performance of integrated health organizations, the study authors noted.

Research in this area has been hampered by the lack of detailed data that allow meaningful examination of performance or even measurement of the scope and scope of healthcare delivery within healthcare systems. The current analysis is believed to be the first comprehensive national study to compare outcomes between patients receiving care inside and outside of health care systems, including privately insured and traditional Medicare patients.

The analysis included a total of 580 healthcare systems, accounting for 40 percent of physicians and 84 percent of general acute care hospital beds. Academic and large non-profit systems provide the majority of system doctors (80 percent) and system hospital beds (64 percent).

System hospitals were larger than hospitals that were not part of a system, with 67 percent of system hospitals having more than 100 beds, while only 23 percent of non-system hospitals had more than 100 beds. System doctor practices also have more than 100 doctors more often than non-system doctor practices (74 percent vs. 12 percent). Integrated systems provided primary care to 41 percent of traditional Medicare beneficiaries; This does not apply to people participating in Medicare Advantage programs.

Next, researchers analyzed the quality and cost of care provided within the systems. Their results suggest that, on average, patients whose GPs are part of the healthcare system receive slightly better care and report slightly better experiences with the healthcare system compared to patients whose GPs are part of independent practices.

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This is despite the fact that many patients are cared for by general practitioners who are not part of the system, sometimes in hospitals or specialist practices that are part of a healthcare system. However, systems care came at a much higher price and contributed to higher overall health care spending, the study showed.

The prices for services provided by doctors and hospitals within the health systems were significantly higher than the prices for services provided by independent doctors and hospitals, according to the study. Medical services provided in the health system cost between 12 and 26 percent more than in private practices. On average, system-based hospital services cost 31 percent more than independent hospital care.

Small differences in quality coupled with large differences in care costs suggest that health systems have, on average, not realized their potential to provide better care at the same or lower cost, the researchers said.

Research team members have compiled a database from various sources to help characterize these healthcare systems and link claims data to information about healthcare providers inside and outside of healthcare systems. The database, housed at NEBR, will be made available free of charge to other researchers in the near future.

For more information about the Health Systems and Provider Database and the research conducted as part of the Health Systems Project, visit NBER Health Systems Project.

Researchers noted that the new database provides a critical foundation for future research that could help identify areas where integrated healthcare systems could outperform independent practices and hospitals, or guide the efforts of healthcare systems still hoping to do so to realize the potential benefits of consolidation while avoiding increased costs.

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“There is no question that large, sophisticated healthcare systems have advantages over independent systems,” said study author David Cutler, Otto Eckstein Professor of Applied Economics at Harvard. “Large systems tend to be less vulnerable to economic downturns and can provide specialized care that would be difficult to sustain in smaller systems. But the hoped-for cost savings of integrated healthcare systems have not yet materialized.”

Authorship, Endorsement, Disclosures

Study co-authors include Michael Chernew, J. Michael McWilliams, Mary Beth Landrum and Andrew Hicks of HMS. NBER’s Maurice Dalton, Angela Yutong Gu, Michael Briskin, Rachel Wu, Zakaria El Amrani El Idrissi and Helene Machado also contributed to this research.

This study was supported by an Agency for Healthcare Research and Quality (AHRQ) grant U19HS024072.

See the article for a full list of disclosures.

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