Association of Financial Integration Between Physicians and Hospitals With Commercial Health Care Prices

Neprash, Hannah T.; Chernew, Michael E.; Hicks, Andrew L.; Gibson, Teresa B.; McWilliams, J. Michael

doi:10.1001/jamainternmed.2015.4610

Cited by 148 publications

(172 citation statements)

References 29 publications

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“…This form of consolidation has increased prices and spending without ostensibly improving quality. 17,25–28 Building on previous evidence, 29,30 our study more generally underscores the importance of differences in profitability between hospital-owned and independent outpatient settings in encouraging hospital–physician consolidation. Thus, our findings support broader proposals to make payments and discounts for care delivery setting-neutral.…”

Section: Discussionsupporting

confidence: 70%

“…For each hospital in each year, we adapted previously described methods, using Medicare outpatient and carrier claims to determine the number of physicians in hematology–oncology, ophthalmology, or rheumatology who were practicing in a facility owned by the hospital. 17 We prespecified these three specialties because they account for the most Part B drug spending in Medicare and have the highest proportions of revenue attributable to parenteral drugs among all specialties. 15,18 We focused on these specialties because of the emphasis of our study on parenteral drugs.…”

Section: Methodsmentioning

confidence: 99%

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Consequences of the 340B Drug Pricing Program

Desai

McWilliams

2018

N Engl J Med

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BACKGROUND The 340B Drug Pricing Program entitles qualifying hospitals to discounts on outpatient drugs, increasing the profitability of drug administration. By tying the program eligibility of hospitals to their Disproportionate Share Hospital (DSH) adjustment percentage, which reflects the proportion of hospitalized patients who are low-income, the program is intended to expand resources for underserved populations but provides no direct incentives for hospitals to use financial gains to enhance care for low-income patients. METHODS We used Medicare claims and a regression-discontinuity design, taking advantage of the threshold for program eligibility among general acute care hospitals (DSH percentage, >11.75%), to isolate the effects of the program on hospital–physician consolidation (i.e., acquisition of physician practices or employment of physicians by hospitals) and on the outpatient administration of parenteral drugs by hospitalowned facilities in three specialties in which parenteral drugs are frequently used. For low-income patients, we also assessed the effects of the program on the provision of care by hospitals and on mortality. RESULTS Hospital eligibility for the 340B Program was associated with 2.3 more hematologist–oncologists practicing in facilities owned by the hospital, or 230% more hematologist–oncologists than expected in the absence of the program (P = 0.02), and with 0.9 (or 900%) more ophthalmologists per hospital (P = 0.08) and 0.1 (or 33%) more rheumatologists per hospital (P = 0.84). Program eligibility was associated with significantly higher numbers of parenteral drug claims billed by hospitals for Medicare patients in hematology–oncology (90% higher, P = 0.001) and ophthalmology (177% higher, P = 0.03) but not rheumatology (77% higher, P = 0.12). Program eligibility was associated with lower proportions of low-income patients in hematology–oncology and ophthalmology and with no significant differences in hospital provision of safety-net or inpatient care for low-income groups or in mortality among low-income residents of the hospitals’ local service areas. CONCLUSIONS The 340B Program has been associated with hospital–physician consolidation in hematology–oncology and with more hospital-based administration of parenteral drugs in hematology–oncology and ophthalmology. Financial gains for hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients. (Funded by the Agency for Healthcare Research and Quality and others.)

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Section: Discussionsupporting

confidence: 70%

Section: Methodsmentioning

confidence: 99%

Consequences of the 340B Drug Pricing Program

Desai

McWilliams

2018

N Engl J Med

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“…58 For analyses of service use, we considered multiple instances of a service on the same day for a given individual to represent a single instance of service use. For spending analyses, we summed payment variables across all claims for a service on the same day for a given individual.…”

Section: Statistical Analysesmentioning

confidence: 99%

Use of Low-Value Pediatric Services Among the Commercially Insured

et al. 2016

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“…More broadly, this study supports the conclusions drawn from previous studies that hospital-physician integration does not increase health care utilization, similar to Baker et al (2014), Cuellar and Gertler (2006), and Neprash et al (2015). Because I find that hospital-physician integration reduces C-sections in a sample of births that are classified low risk of having a C-section, I find that integration reduces potentially unnecessary C-sections.…”

Section: Resultssupporting

confidence: 89%

“…I exploit heterogeneity in the various forms hospital- Cesarean sections, incidental appendectomy in the elderly, and bi-lateral cardiac catheterization. Neprash et al (2015) find that integration had no significant effect on price standardized spending per-enrollee in inpatient settings. 3 Ciliberto and Dranove (2006) argue that California is a particularly good setting for this type of analysis because "it has been a leader in innovative health care organizational practices."…”

Section: Tablesmentioning

confidence: 64%

Essays on the Effects of Health Insurer and Health Care Provider Organization on Patient Treatments

Johnson

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The United States health care system has garnered significant policy attention in recent years. The importance of the health care system is in part a fiscal concern, but also because of the role it plays in peoples' lives. In many cases, patients' lives greatly depend on the quality of the health care they receive. The organization of the health care system has undergone many dramatic changes in recent years and it is important to understand how these changes impacted the way the health care system functions. The effects of the various changes on health care spending and, in particular, on patient treatment outcomes remain poorly understood. In this dissertation, I investigate how three recent trends in the organization of the U.S. health care system have impacted the treatments that patients receive: the decrease in health insurer competition, the increase in hospital-physician integration, and the use of managed care in public insurance programs.In Chapter 1, I study whether health insurer competition increases the use of costly treatments. Health insurers have an incentive to influence health care providers' treatment decisions to reduce their own reimbursement costs. If a single insurer is effective at inducing a provider to use less costly treatments, the provider may do so for patients of other insurers. While an insurer can reduce their own costs, spillover of their cost reduction can allow rival insurers to also benefit. I develop a theoretical framework demonstrating how competition can deter insurers from limiting costly treatments due to provider-level spillover concerns. I empirically test the relationship between Health Maintenance Organization (HMO) competition and Cesarean section (C-section) use. C-sections are a costly treatment that HMOs have an incentive and the potential ability to influence. I argue that HMOs' return to limiting C-sections should be lower at hospitals that contract with more HMOs due to potential spillover. I find that patients are more likely to receive C-sections at hospitals with lower HMO concentration -where spillover poses a greater deterrent to HMO cost reduction. The magnitude of this effect increases with the level of HMO competition in the market containing the hospital. Taken together, these results provide evidence that HMO competition can increase the use of C-sections at hospitals that contract with multiple HMOs.ii In Chapter 2, I study whether hospital-physician integration affects health care utilization by altering the treatments patient receive. I estimate the effect of hospitalphysician integration on the use of C-sections in childbirth using a sample of privately insured patients from California over 2005-2012. Childbirth is a convenient treatment setting to study utilization because it presents a binary choice between a high intensity, high cost procedure (C-section) and a comparatively low intensity, low cost alternative (vaginal birth). I am able to decompose the effect of hospital-physician integration on C-section use by the form of integra...

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Association of Financial Integration Between Physicians and Hospitals With Commercial Health Care Prices

Cited by 148 publications

References 29 publications

Consequences of the 340B Drug Pricing Program

Consequences of the 340B Drug Pricing Program

Use of Low-Value Pediatric Services Among the Commercially Insured

Essays on the Effects of Health Insurer and Health Care Provider Organization on Patient Treatments

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