Here's a useful report from the Leonard Davis Institute of Health Economics at the University of Pennsylvania:
A new study by LDI Senior Fellow Lawton Burns and colleagues challenges the conventional wisdom about the societal benefits and comparative advantages of integrated delivery networks (IDNs). A literature review and detailed analysis of financial and quality indicators found “scant evidence” of improved quality, lower cost per case, or greater societal benefit. From the abstract:
Looking at the benefits to society, the authors found that there is evidence that IDNs have raised physician costs, hospital prices and per capita medical care spending; looking at the benefits to the providers, the evidence also showed that greater investments in IDN development are associated with lower operating margins and return on capital. As part of this report, the authors conducted a new analysis of 15 of the largest IDNs in the country. While data on hospital performance at the IDN level are scant, the authors found no relationship between the degree of hospital market concentration and IDN operating profits, between the size of the IDN’s bed complement or its net collected revenues and operating profits, no difference in clinical quality or safety scores between the IDN’s flagship hospital and its major in-market competitor, higher costs of care in the IDN’s flagship hospital versus its in-market competitor, and higher costs of care when more of the flagship hospital’s revenues were at risk.
In a related piece at Modern Healthcare, the authors conclude:
After decades of strenuous policy advocacy, it is still not clear that, in the case of the IDN, the whole is greater than the sum of its parts, or that policymakers should be encouraging further IDN formation.
I share the authors' skepticism about this direction in health care policy.
A new study by LDI Senior Fellow Lawton Burns and colleagues challenges the conventional wisdom about the societal benefits and comparative advantages of integrated delivery networks (IDNs). A literature review and detailed analysis of financial and quality indicators found “scant evidence” of improved quality, lower cost per case, or greater societal benefit. From the abstract:
Looking at the benefits to society, the authors found that there is evidence that IDNs have raised physician costs, hospital prices and per capita medical care spending; looking at the benefits to the providers, the evidence also showed that greater investments in IDN development are associated with lower operating margins and return on capital. As part of this report, the authors conducted a new analysis of 15 of the largest IDNs in the country. While data on hospital performance at the IDN level are scant, the authors found no relationship between the degree of hospital market concentration and IDN operating profits, between the size of the IDN’s bed complement or its net collected revenues and operating profits, no difference in clinical quality or safety scores between the IDN’s flagship hospital and its major in-market competitor, higher costs of care in the IDN’s flagship hospital versus its in-market competitor, and higher costs of care when more of the flagship hospital’s revenues were at risk.
In a related piece at Modern Healthcare, the authors conclude:
After decades of strenuous policy advocacy, it is still not clear that, in the case of the IDN, the whole is greater than the sum of its parts, or that policymakers should be encouraging further IDN formation.
I share the authors' skepticism about this direction in health care policy.
Detail:
Bigger is better? Not so fast!