More than half of all physicians and 72% of hospitals in the U.S. were affiliated with a health system in 2018, according to a report published by Health Affairs on Monday. From 2016 to 2018, the share of physicians affiliated with vertically integrated health systems rose 11 percentage points, from 40% to 51%.
The size of those systems based on the number of employed physicians also increased, with the median number of physicians rising 29%. The largest percentage change was in the median number of primary care physicians, which increased by 32% over the study period.
- Driven somewhat by mergers and acquisitions, for-profit and church-operated health systems saw the largest increases in system size, according to the report.
Over the past decade mega health systems across the country have gobbled up smaller practices, becoming larger and more financially integrated. New research from Health Affairs shows that was especially true from 2016 to 2018, when provider consolidation rose substantially.
The Health Affairs report identified 50 deals related to mergers or acquisitions of health systems by other systems from 2016 to 2018. To qualify as a health system in the study, systems must have at least one nonfederal general acute care hospital, fifty or more physicians and ten or more primary care physicians.
Five systems acquired two or more other systems during the study period. Church-operated systems were especially active acquirers with ten deals, as were for-profit systems, with seven.
Most deals involved larger, national chains acquiring smaller, metro-based systems, the report said, warning that pattern could "complicate local and national efforts to regulate provider organizations to ensure that community needs are met."
Researchers also looked at the share of physicians and hospitals in health systems by ownership type. While nonprofits accounted for 62% of system-affiliated physicians, they only held 50% of system hospital beds.
Meanwhile church-operated systems, which account for only 8% of all systems, held 21% of the share of hospital beds and 19% of system affiliated providers.
For-profits had the lowest share of system-affiliated physicians at 8%, though a relatively high share of hospital beds at 16%.
Public hospitals had 11% of hospital beds.
The ownership of hospitals or physician practices by larger health systems, also known as financial integration, often has anti-competitive effects that drive up healthcare costs for U.S. consumers, according to another Health Affairs report published Monday.
Researchers surveyed nationally representative samples of hospitals and physician practices according to whether they were independent or were owned by complex systems, simple systems or medical groups.
They found significant variations in quality scores across hospitals and practices in each ownership category, suggesting financial integration does not correlate with improvements in care delivery, a perennial yet unproven justification from providers looking to consolidate.