Vertical integration driving health care consolidation
The number of physicians affiliated with a health system has risen from 40% in 2016 to 51% in 2018.
Over the past several years, consolidation among hospitals has been drastically changing the health care landscape. In addition, consolidations of physicians and hospitals into vertically integrated health systems has grown rapidly from 2016 to 2018, according to a study published in the August edition of Health Affairs.
Such consolidation is yielding highly concentrated markets along both horizontal and vertical dimensions. The authors called for future research to examine the drivers of consolidation, variation in performance by ownership type, and the ramifications of increased consolidation on cost, access and quality of care.
Related: States taking action to curb provider consolidation and price increases
Health systems underwent substantial consolidation from 2016 to 2018, with two mergers resulting in new systems and 48 acquisitions of systems by other systems. All told, 52 target systems, which collectively consisted of 178 hospitals and 14,533 physicians, merged with or were acquired by 41 acquirers, the report said. Five systems were acquirers in two or more deals between 2016 and 2018. Church systems were the most active acquirers, with 10 deals, as were for-profit systems, with seven deals.
The report said the size and scope of the largest health systems may have implications for antitrust enforcement.
According to the report, 51% of all physicians and 49% of primary care physicians were affiliated with a health system in 2018, compared to 40% of all physicians and 38% of primary care physicians in 2016.
Among hospitals, 72% were affiliated with health systems in 2018, up from 70% in 2016. In 2018, 91 percent of hospital beds were in system-affiliated hospitals in 2018, up from 88 percent in 2016.
Health systems’ size, as measured by the number of physicians, grew significantly from 2016 to 2018. Among the 556 systems in operation in both years, the median number of physicians increased by 29%, from 285 to 369.
Changes in system size varied by ownership type, with systems that are for-profit and church-operated showing the largest increases in system size, driven in part by a large number of mergers and acquisitions, the report states.
At for-profit systems, the median number of physicians more than doubled, from 519 to 1,127, while the median number of hospitals in each system increased by 156 percent, from 9 to 23. Among church-operated systems, the median number of physicians grew 32%, from 622 to 820, and the median number of hospitals remained at six for both 2016 and 2018.
At public hospital systems, the median number of physicians grew 34%, from 287 in 2016 to 384 in 2018, and the median number of hospitals declined from two to one. At nonprofit systems, the median number of physicians increased from 264 in 2016 to 341 in 2018, a jump of 29%, and the number of hospitals remained steady at two in both years.
Read more: