- Consolidated health systems deliver care at a higher cost than independent practices or hospitals, according to a study published in JAMA network.
- The study analyzed patients whose primary care physicians are employed by health systems versus those whose are employed by independent practices or hospitals, finding patients with system-based doctors had slightly better care experiences.
- Nonetheless, researchers found that commercial hospital prices for admissions of common diagnoses were, on average, 31% higher than non-affiliated health system hospitals.
Health systems provide a significant chunk of the care delivered in the U.S. In 2018, most hospitals and 40% of physicians were members of health systems, accounting for 89% of hospital admissions and 29% of physician visits by traditional Medicare beneficiaries, according to a JAMA article published last week.
Today’s national health systems are the result of “continuous consolidation” spurred by acquisitions in recent decades, according to the study. Consolidated systems have the power to improve quality but also have increased market power to negotiate higher prices.
Even during the throes of the COVID-19 pandemic, physicians reported an increased reception to joining health systems, the study said.
But the study found that, while care quality “marginally” increased in areas like clinical quality and patient experience in consolidated health systems compared to their non-consolidated peers, health systems had “significantly higher” healthcare prices. Hospitals in large and academic systems charged the highest prices overall.
"We think that health systems have a lot of advantages that would lead to higher quality, so why do we not see that?” said Nancy Beaulieu, the study’s lead author and a research associate in the department of healthcare policy at Harvard Medical School.
Healthcare prices are likely higher in consolidated systems due to their bargaining power when negotiating payment rates in contracts with insurers, Beaulieu said. Additionally, it costs more to run health systems with greater resources like advanced technology, specialized care and clinician training programs.
Corporations had been steadily buying physician practices over the past decade, with acquisitions accelerating during the COVID-19 pandemic as financial woes forced many independent physicians to sell their practices.
Almost 75% of doctors worked for hospitals, health systems or corporate entities in 2022, up from 69% in 2021, according to a study from Avalere sponsored by the Physicians Advocacy Institute.
The JAMA study defined health systems as organizations commonly owned or managed with at least one general acute care hospital, 10 primary care physicians and 50 total physicians in one region. Researchers looked at a variety of data sources including surveys, government data and claims data from 2018 and then analyzed patient data.
The findings come as physicians face pandemic-driven burnout. Resident physicians and interns have also seen an uptick in union organizing.