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The Effect of Hospital-Physician Vertical Integration on Utilization-Driven Changes in Healthcare Spending for an
Alexandra Harris1,2, Neil Jordan3,4, Cynthia Barnard5
1Health Sciences Integrated PhD Program, Northwestern University Feinberg School of Medicine, Chicago, Illinois, USA.
Objective:
To estimate the effect of hospital-physician vertical integration on utilization-driven annual healthcare spending for an all-payer cohort of patients with multiple chronic conditions.
Study Setting And Design:
We used a quasi-experimental difference-in-differences with staggered adoption approach to estimate the effect of hospital-physician vertical integration on total annual utilization-driven spending per patient (primary outcome). We also examined changes in annual inpatient, outpatient, professional, and pharmaceutical utilization-driven spending (secondary outcomes).
Data Sources And Analytic Sample:
Using 2016-2021 Virginia all-payer administrative claims data, we conducted a retrospective analysis of 77,248 patients aged 45-99, with Medicare, Medicaid, and/or commercial insurance, and at least two qualifying chronic conditions at the beginning of the study period. The treatment group included patients of physicians who began the study period independent and became integrated in 2018, 2019, 2020, or 2021, respectively. The control group included patients of physicians who remained independent during the entire study period.
Principal Findings:
While we found no significant difference in utilization-driven spending after integration overall ($1063, CI: $-364 to $2414), meaningful heterogeneity emerged across the staggered integration cohorts. Notably, when excluding the 2021 integration cohort (which exhibited significantly lower total annual utilization-driven spending), we found evidence of substantially higher annual total ($1750, CI: $207 to $3739) and inpatient ($898, CI: $65 to $2293) spending after integration among the earlier integration cohorts, driven by inpatient utilization. These findings held when limiting our analyses to patients of primary care physicians.
Conclusions:
This study provides evidence that the timing of hospital-physician vertical integration (pre-pandemic versus pandemic-era), particularly among primary care physicians, drove heterogeneous treatment effects in utilization-driven spending for the growing population of adults living with multiple chronic conditions.
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