CHCE Forum: Hospital Acquisition of Physician Practices: Higher Value or Higher Costs?

Over the past two decades, hospitals have acquired an increasing number of physician practices. This trend is being fueled by a variety of factors, but two in particular stand out. First, hospitals have shown a strong interest in increasing market share and revenue. Second, and more recently, hospitals have been preparing for payment reforms in which fee for service is being replaced by payment methods that make providers more accountable for cost and quality. As hospitals continue to employ more physicians, communication and coordination across settings should improve, making the quality of care better and its delivery more efficient. But this relationship between hospitals and physicians does not necessarily lead to the type of integration that can help coordinate and improve care for patients or to an emphasis on accountability for quality and cost. In fact, a growing body of research shows that costs increase when hospitals employ physician practices.

This forum discusses the impact of the integration of physicians into hospitals and of how policymakers can use payment reforms and other tools to shift the focus of vertically integrated health care systems to high-value care.