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More physicians contracting with hospitals, but physician integration is complex, study says

Between 2008 and 2013, the share of hospitals with physicians on salary rose from 44 to 55 percent of all facilities.

Jeff Lagasse, Associate Editor

Thanks to the Affordable Care Act and a changing economy, more physicians are contracting with hospitals. But according to new research from Rice University's Baker Institute for Public Policy, achieving physician-hospital integration is a little more complicated than previously thought.

The study names four forms of integration based on the type of contractual relationship a hospital has with physicians, from least to most tightly integrated: independent practice associations, open physician-hospital organizations, closed physician-hospital organizations and fully integrated organizations.

Researchers looked at the overall changes in the number and percentage of hospitals engaged in various forms of physician-hospital integration, as well as the transitions between these forms of integration by hospitals over time. Between 2008 and 2013, the share of hospitals with physicians on salary rose from 44 to 55 percent of all facilities. Looser forms of physician-hospital integration, such as joint contractual networks with managed care organizations, became less prevalent over that same period.

[Also: Healthcare mergers will continue to surge thanks to benefits of integration, CEO predicts]

The authors found 1,525 hospital integration form transitions, reflecting a change in the integration form of 1,445 hospitals between 2008 and 2013. They found 599 cases in which a hospital switched from no integration to some form of integration. The form of integration with the greatest change is the fully integrated hospitals category, with 710 transitions to fully integrated organization agreements. A majority of that growth comes from the 550 hospitals changing from no integration to a fully integrated organization.

Yet the shift toward tighter integration obfuscates the fact that many hospitals de-integrated or shifted to more loosely integrated physician-hospital relationships during that time. Although the number of hospitals reporting no integration declined by only 110 facilities between 2008 and 2013, there were 489 cases between these two years in which a hospital de-integrated.

Future studies that distinguish between integration types are essential for setting policies that foster integrated care to improve quality and lower costs, instead of raising prices and harming patient welfare, the researchers said. Loose forms of integration that generate more managed care contracts and provide administrative services could increase utilization and expenditures, with no improvement in quality or lower costs, they said. And achieving these latter two goals is likely only with tighter integration, which has features similar to those of accountable care organizations and medical homes.

Twitter: @JELagasse