Piggy bank and health conceptsAccording to the study, the share of physician practices owned byhospitals rose from 14 percent in 2012 to 29 percent in 2016.(Photo: Shutterstock)

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A new study from Texas finds that when health systems acquiredphysician practices in the state, costs went up, but quality ofcare did not.

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Health care consolidation and integration has become acontroversial issue in recent years, as expected efficiencies havenot always led to lower costs. A wave of consolidations across allfacets of health care has led to concerns about anti-competitive trendsin markets dominated by a handful of players.

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Related: UnitedHealth buying up doctors to defend againstcompetition

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The report from Rice University and Blue Cross and Blue Shieldof Texas was published in the Journal of General Internal Medicine.The researchers said their data on integration does not showimproved care coordination—instead it suggests delivery of moreservices but not an improvement in quality.

Vertical integration—an ongoing trend

Vertical integration, the practice of hospitals or healthsystems buying physician practices, has been on the rise. Accordingto the study, the share of physician practices owned by hospitalsrose from 14 percent in 2012 to 29 percent in 2016. Physicians andhospitals can also be integrated by having shared contractingarrangements with insurers.

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In this study, researchers looked at two years of claims data(2014-2016) for people in PPO health plans from the state's fourlargest metropolitan areas — Dallas, Houston, San Antonio andAustin. Those metropolitan areas have a total population of 18.9million, greater than the population of 46 U.S. states. The studyincluded all claims for health care services with patients betweenthe ages of 19 to 64, except for prescription drugs.

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The researchers found PPO members had spending that was 5.8percentage points higher when treated by doctors in hospital-owned,versus physician-owned, practices. "The difference appearsattributable to greater service use rather than higher prices," thestudy said. "For four out of five common diagnostic tests (forexample, X-rays and MRIs), claims per patient were equal to orhigher in hospital- versus physician-owned practices. There was noconsistent difference in quality of care."

Breaking down the costs

Patients treated by hospital-owned physicians saw higher costsin a few specific areas, the study said.

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For those patients, imaging costs were 13 percent higher;durable medical equipment costs were 12.9 percent higher; andspending on unclassified services such as operating and recoveryroom claims was 21.4 percent higher.

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"Healthcare costs continue to rise faster than the growth rateof the overall economy," said Vivian Ho, lead author of the study."Tighter integration of physicians with hospitals appears to becontributing to that cost growth, with no evidence of betterquality."

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The study noted that there were some limitations to theresearch. For example, the researchers lacked data fromprescription drug claims. Since spending on prescription drugscould have an impact on other areas of care, the findings coulddiffer if drug claims data were available.

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