Catalyst for Payment Reform

MYTHBUSTER: Consolidation equals better coordination & outcomes

MYTHBUSTER: Consolidation equals better coordination & outcomes

In the movement to population-based payment, payers are finding ways to hold providers accountable for the cost of their patients’ care.  In the past several years, providers have made the argument that they need to integrate formally (e.g. mergers, acquisitions, etc.) with other organizations so that all providers caring for a patient coordinate under one “roof.”  This integrated approach would help providers oversee where patients seek care, what types of services they utilize and help to avoid duplicative services and identify gaps in care.

This argument is convincing. Physicians with established relationships should be more organized in their delivery of health care than physicians operating disparately. Costs should also be lower due to efficiencies physicians gain when they work together and share information.

So why do studies show that provider consolidation doesn’t lead to high-value care for patients?

Consolidation among physicians has caused about an 8 percent increase in fees over the last 20 years and, as we explored in the last MYTHBUSTER, there is no evidence that market power leads to higher quality care. A study in 2014 found that large, complex organizations might increase costs with no gain in quality.

Evidence suggests looser forms of integration among provider groups can lead to effective care coordination and good outcomes without the increased costs associated with consolidation. For example, the Blue Cross Blue Shield of Michigan’s Patient Centered Medical Home program saved about $155 million in its first three years through more coordinated, higher quality care, including fewer emergency department visits, all executed by independent physicians. Other programs have demonstrated similar findings without relying on consolidation.

The bottom line—it is clear that providers working together to manage care certainly can deliver on the promised upside of lower cost, higher quality care. However, it doesn’t appear that mergers and acquisitions are the best, or only route, to getting there.

Join the debate on September 6, 2017!

CPR is  hosting a Virtual Summit to help health care stakeholders learn more about the impact provider consolidation can have on health care costs and quality.  Register today to learn from the experts.

Also, check out CPR’s Amicus Curiae Brief filed to the U.S. Court of Appeals, which argues against the potential acquisition of a physician group by a hospital system in the name of clinical coordination.

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