How Do Physician Group Size and Type of Physician Impact Spending and Quality?

According to a study published June 17 in JAMA: Internal Medicine,  there is reduced health care spending and better quality of care for Medicare beneficiaries who are treated in larger independent physician groups with a strong primary care presence.

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Accountable care organizations (ACO), introduced to reduce Medicare spending and improve health care quality, rely on delivery system integration and financial risk sharing. Primary care providers act as the foundation of ACOs by serving as care managers and coordinators. While ACOs are becoming more and more common, "…prior studies have not elucidated how organizational size relates to spending and outcomes or how performance of larger groups on spending and quality measures varies by specialty mix and payment incentives." Therefore, the authors set out to determine the clinical and economic consequences of the cornerstones of the ACO model: delivery system integration and health care provider risk sharing.

The study used 2009 Medicare claims and linked American Medical Association Group Practice data to examine differences in cost and quality between smaller and larger provider groups. The health care provider groups were divided into three categories: 1) small groups not eligible for ACO participation (<5,000 beneficiaries), 2) medium-sized groups who are candidates for the Shared Savings Program (5,000-14,999 beneficiaries) and 3) large groups who are candidates for the Pioneer Program (≥15,000 beneficiaries).

Larger hospital-based groups were associated with higher spending on beneficiaries without improved quality, compared to smaller groups. According to the authors, this finding is "consistent with other studies of physician-hospital consolidation." Hospital-based groups also had the highest 30-day readmission rates of all the groups.

Annual spending per Medicare beneficiary was on par for medium-sized and large independent physician groups, in comparison to small groups. The total spending per beneficiary for these two groups was $849 higher than for small groups. However, larger physician groups had lower spending rates for procedures, imaging, and cardiac tests for beneficiaries. In the way of quality performance, medium-sized and large independent physician groups performed better than small groups and hospital-based groups on process measures of quality of care. The specialty orientation of groups played a major role in these results, "as a strong primary care orientation was associated with substantially lower spending, fewer readmissions, and better quality for diabetes care among hospital-based groups."

"These findings suggest that health care provider consolidation in a largely fee-for-service payment environment has been associated with slightly lower spending and modest gains in quality of care when centered on primary care but not when centered on specialty care," conclude the authors. "Our results support the notion that promoting both delivery system integration and health care provider risk sharing may lower spending while improving quality of care, as intended by Medicare ACO programs."

Keywords: Health Personnel, Fee-for-Service Plans, Quality of Health Care, Accountable Care Organizations, Medicare, Primary Health Care, Diabetes Mellitus, United States, Group Practice, Risk Sharing, Financial

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