Dive Brief:
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A new report in Health Care Management Review analyzing research on vertical integration found that M&A can lead to better care quality, but doesn't positively affect utilization, spending or prices.
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In the study, researchers examined literature on the topic published between 1996 and 2016. They reviewed more than 7,500 articles and drilled down into 29 of them. Few studies explored patient-centered outcomes. Most of those examined mortality, which showed no differences compared to before vertical integration.
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Researchers found that research on the topic was a mixed bag on utilization. Nine studies showed that integration led to higher spending.
Dive Insight:
Health systems and larger medical practices continue to swallow up small, independent medical groups. Health execs often trumpet improved quality and lower costs that they say are a byproduct of M&A. However, critics say deals actually lead to higher prices and costs of care through reduced competition, while not improving quality or outcomes.
Notable mergers like Beth Israel Deaconess Medical Center and Lahey Health in Massachusetts can lead to consolidated markets that give health systems more negotiating power over payers, which can result in higher prices. Kaufman Hall said in a recent report that the average size in revenue of sellers was $409 million in 2018.
However, smaller practice deals that don't get the headlines are continuing to reshape the industry. The new report found that despite the trend of healthcare M&A involving small practices, there's been little research on the matter.
One reason for the vertical integration trend relates to payers moving to value-based contracting and alternative payment models. However, the researchers concluded that the move may not actually "achieve higher-value care."
The mixed bag of results the study authors found may show that integration is not a solution when looking for ways to participate in alternative payment models.
The authors also wrote that health systems with a heavy hospital focus may not benefit from acquiring practices if the result is more spending. "More information is needed to identify the health system attributes that contribute to improved outcomes, as well as which policy levers can minimize anticompetitive effects and maximize the benefits of these affiliations," they wrote.