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Organization & Performance of U.S. Health Systems

Receiving substantially higher reimbursements while providing marginally better care, large health systems in the U.S. delivered a disproportionate share of the nation’s medical services in 2018, researchers report. “Small quality differentials combined with large price differentials suggests that health systems have not, on average, realized their potential for better care at equal or lower cost,” the authors conclude.

Health systems — “groups of commonly owned or managed entities that included at least 1 general acute care hospital, 10 primary care physicians, and 50 total physicians located within a single hospital referral region” — were categorized as academic, public, large for-profit, large nonprofit, or other private systems. Pricing and spending data were obtained from CMS and many private sources. Quality and cost outcomes were assessed for Medicare beneficiaries for system and nonsystem physicians.

“A total of 580 health systems were identified and varied greatly in size,” the authors report. “Systems accounted for 40% of physicians and 84% of general acute care hospital beds and delivered primary care to 41% of traditional Medicare beneficiaries. Academic and large nonprofit systems accounted for a majority of system physicians (80%) and system hospital beds (64%). System hospitals were larger than nonsystem hospitals (67% vs 23% with >100 beds), as were system physician practices (74% vs 12% with >100 physicians). Performance on measures of preventive care, clinical quality, and patient experience was modestly higher for health system physicians and hospitals than for nonsystem physicians and hospitals. Prices paid to health system physicians and hospitals were significantly higher than prices paid to nonsystem physicians and hospitals (12%-26% higher for physician services, 31% for hospital services). Adjusting for practice size attenuated health systems differences on quality measures, but price differences for small and medium practices remained large.”

Editorial: “Research and antitrust attention are … urgently needed on emerging competitors to health systems: private equity firms, publicly traded physician management companies, health insurers, and national pharmacy chains that are increasingly acquiring practices and employing physicians,” writes an editorialist. “Unfortunately, research on systems and their competitors is very difficult and expensive to conduct because there are no data sources that reliably identify who owns what. The federal government’s Medicare Provider Enrollment, Chain, and Ownership System database is helpful but not sufficient to reliably identify ownership and is not generally available to researchers. [These authors] had special access to this database and needed 24 additional data sources to complete their research. The next decade will be a turbulent time for hospitals and physicians. This turbulence will make it even more likely that—for better or worse—they will seek to be subsumed within larger organizations.”

Source: JAMA