The Growing Integration of Physician Practices: With a Medicaid Side Effect

Strategic alignment and integration is currently in vogue throughout the health care industry, but its diffusion and pace have not been documented in recent years. The full range of downstream implications from greater alignment between hospitals and physicians has also not been completely explored.

We track the organizational landscape among all office-based US physician practices from 2009 to 2015 and document the degree of vertical integration over time. Then, we examine the implications of vertical integration on practices' acceptance of publicly insured patients.

We use descriptive trends and linear regression models with practice level fixed effects to capture the relationships between within-office changes in integration behavior and changes in public payer acceptance.

Independent (nonintegrated) physician practices are still the most common organizational type, but their share is declining as the share of practices integrated with a health system increases 3-fold between 2009 and 2015. Although >80% of practices that are part of a health system accept Medicaid, <60% of independent practices will see these patients. Vertically integrating with a health system makes it more likely a practice will start seeing Medicaid patients.

Integration-and possibly consolidation-appears to be occurring and may be increasing over time in the United States. However, it also seems to increase the number of physician practices participating in the Medicaid program. This beneficial side effect has not been previously documented and should be kept in mind as policymakers weigh the pros and cons of a more integrated health care system.