Impact of hospital-physician integration on Medicare patient mix

Hospital employment of physicians, often called hospital-physician vertical integration, has become widespread in health care delivery, but whether hospital employment tilts the case mix of physicians toward higher-complexity patients remains unknown.

Cross-sectional and difference-in-differences analysis of 2014-2019 Medicare Standard Analytic Files.

We compared pre- and postemployment patient panels of primary care physicians who did and did not become hospital employees, analyzing changes in the prevalence of chronic conditions. We measured arthritis, depression, diabetes, hypertension, and ischemic heart disease. We also evaluated whether patients who were dropped from physician panels found alternative sources of primary care.

Hospital-employed physicians treated patients of similar or better health; for instance, 54% of integrated physicians' patients had 2 or more chronic conditions compared with 56% among independent physicians (P < .001). After becoming hospital employees, physicians treated approximately 10% fewer Medicare patients (-9.5%; 95% CI, -11.3% to -7.7%). Within physician panels, the prevalence of patients with 2 or more chronic conditions did not significantly change after employment relative to independent physicians (-1.1%; 95% CI, -2.3% to 0.2%). Approximately 37% of patients were dropped from physician panels after employment; these patients were less likely to find alternative primary care compared with those dropped from independent physician panels (P < .001).

Hospital employment of physicians resulted in neither a higher number nor a higher proportion of complex patients treated by integrated physicians, at least among traditional Medicare patients.