What Role Do Vertical Relationships Play When It Comes to Quality of Care?

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Over the past decade, this concept of physicians working directly with hospitals and health systems has become more commonplace. In fact, between 2012 and 2022, the number of physicians working in private practice decreased from 60% to 47%; meanwhile, the proportion of physicians that were directly employed by or contracted with hospitals or health systems rose from 29% to 41%.¹ The argument could be made that this idea of consolidating—otherwise known as a formation of this vertical relationship between physician-hospital or physician–health system ownership and affiliations—could result in higher prices, due to physicians having negotiating power with their acquirers. A difference-in-differences study published JAMA Health Forum² sought to explore this primary-care physician (PCP)-health system relationship, particularly regarding whether this relationship impacted quality of care.

The analysis—which followed the Strengthening the Reporting of Observational Studies in Epidemiology (STROBE) reporting guideline—examined outcomes for patients whose PCP entered a vertical relationship with a large system in 2015 or 2017 alongside patients whose PCP was either never or always in a vertical relationship with a large system from 2013 to 2017. Various models interpreted differences between patient qualities, PCPs, and market concentration, along with other trends. This 2013 to 2017 data was pulled from the Massachusetts All-Payer Claims Database.

It’s also important to note that the study population only consisted of commercially insured patients who were signed up to a PCP in the Massachusetts Health Quality Partners’ Massachusetts Provider Database in either 2013, 2015, or 2017. The analyses occurred between January 2021 and January 2024.

In total, the study population featured 4,603,172 patient-year observations in that 2013 to 2017 timeframe, with the following breakdown:

• 53.5% were female
• 46.5% were male
• 35.3% had a chronic condition
• There was mean (SD) age of 38.9 (20.3) years

The study determined that there was no association between vertical relationships and low-value care or ambulatory care–sensitive conditions use. A patient’s PCP that was entering a vertical relationship had no reported association with the chance of a follow-up within 90 days of cancer diagnosis with any oncologist; however, the PCP was associated with a 7.34–percentage point (pp) (95% confidence interview, CI, 2.28-12.40; P = .01) increase in the probability of follow-up with an oncologist in the health system.

There was an association between vertical relationships and increased post-hospitalization follow-up with a physician in the health system by 7.51 pp (95% CI, 2.96-12.06: P = .001) in the 2015 subgroup. PCP–health system vertical relationships were associated with a significant decrease in disintegration of practice site visits of −1.05 pp (95% CI, −2.05 to 0.05; P = .04).

As a result, the study investigators concluded that, “In this difference-in-differences study of vertical relationships between PCPs and large health systems across Massachusetts, we found no association of vertical relationships with low-value care, hospital admissions, or ED visits for ACSCs among the commercially insured. We found that vertical relationships were associated with small reductions in care fragmentation and increases in within-system physician follow-up.

“These findings are consistent with vertical relationships being associated with patient steering but not necessarily improvements in patient outcomes. Because steering within health systems has been shown to increase spending, largely through prices, this suggests that vertical relationships may result in insurers paying more for the same quality of care. The results of this study should be taken into account by policymakers and antitrust regulators when considering the potential benefits against the demonstrated harms (ie, spending increases) of vertical consolidation.”

References

1. Kane CK. Policy research perspectives. American Medical Association; 2023. https://www.ama-assn.org/system/files/2022-prp-practice-arrangement.pdf

2. Ianni KM, Sinaiko AD, Curto VE, Soto M, Rosenthal MB. Quality-of-Care Outcomes in Vertical Relationships Between Physicians and Health Systems. JAMA Health Forum. 2024;5(8):e242173. doi:10.1001/jamahealthforum.2024.2173