A new study challenges the idea that hospitals are "gobbling up" physician practices.
While many hospitals are acquiring physician practices, it's rarely en masse, according to a study published this week in Health Affairs. On average, hospitals acquired only one or two practices between 2007 and 2017, the study said.
Acquisition rates varied widely between specialties: More than 51% of oncology practices that were independent in 2007 had been purchased by a hospital or health system by 2017 compared to just under 10% of ophthalmology practices.
Sayeh Nikpay, Ph.D., assistant professor in the Department of Health Policy at Vanderbilt University, told FierceHealthcare previous studies have tried to estimate the impact of vertical integration on costs and patient outcomes without getting the full picture of in which sectors these deals were prevalent.
"There's a gap in the literature," Nikpay said. "They don't really know empirically 'Has it accelerated? Where is it happening the fastest?'"
Nikpay said that a more complete picture of the vertical integration is crucial as policymakers take aim at such deals in reforming policy such as the 340B drug discount program. The findings, she said, don’t support hypotheses such as the Affordable Care Act and Medicaid expansion driving this trend either.
Critics of 340B have argued that it has grown too large, and that hospitals and health systems are "gaming" the program by snapping up pricey specialty practices like oncology. Nikpay said that the study also calls that conclusion into question, as trends in vertical integration extend back to before 340B was expanded.
Plus, she said, the researchers found an uptick in hospitals and health systems acquiring general surgery practices, which wouldn't fit into the theory of buying up practices to boost 340B payouts.
"If people thought 340B expansions in 2010 were the thing driving vertical integration, this paper would suggest it's maybe not," Nikpay said.
Instead, the results could represent changing dynamics in how physicians want to practice, Nikpay said. The researchers hypothesize that younger doctors may prefer to be employed by hospitals, as it requires less management and administrative work.
"The business of medicine has become exceedingly complicated," Nikpay said, "and it could change the way physicians want to practice."
The jury is also still out on whether these deals pay off for patients, Nikpay said. From a health policy perspective, it does stand to reason that hospital-physician consolidation would lead to lower costs thanks to improved coordination and higher efficiency. But, she said, an economist is going to be skeptical.
A hospital may save money by buying a practice, she said, but those costs may not be passed on to patients.