Health Systems and High-Need Populations: The Effect of Vertical Integration on Utilization, Spending, and Quality for Medically ComplexPatients

PROJECT SUMMARY
Medical care in the United States is increasingly delivered in health systems—which the Agency for Healthcare
Research and Quality has defined as organizations with at least one hospital and one physician group
providing comprehensive care that operate through common ownership or joint management. In the past
decade, health system acquisition of physician practices has increased markedly; more than half of U.S.
physicians are now affiliated with one of 637 health systems. Prior research has found that vertical integration
can lead to higher commercial health care prices, but has uncertain effects on quality, spending, and utilization
for Medicare beneficiaries. Little is known about how health system expansion influences care for medically
complex Medicare patients, a distinct population that has high health needs and frequent interactions with the
medical system. The long-term goal of the proposed research is to determine whether the growth of health
systems improves care for medically complex patients and what health system strategies and characteristics
contribute to their success or failure in doing so. The overall objective of this project is to provide health care
leaders and policymakers with an understanding of whether and how health systems change the delivery and
quality of care for medically complex Medicare beneficiaries, with a focus on patients in acquired primary care
practices. The central hypotheses are that, on average, health system acquisition of practices improves care
for medically complex patients, but that improvement varies across health systems. These hypotheses will be
tested by pursuing three specific aims: (1) determine the impact of health system acquisition of primary care
practices on utilization, spending, and quality for medically complex patients (overall and for three
subpopulations); (2) examine variation by health system in spending and quality changes for medically
complex patients at acquired practices, and identify characteristics of systems that most improve their care;
and (3) understand how the experiences of physicians and the efforts of health system leaders differ at
systems that improve care for medically complex patients at acquired practices from those that do not. This
project will use Medicare claims data and qualitative data collected by the researchers. Methodologically, it will
employ rigorous quasi-experimental approaches including difference-in-differences analyses, as well as in-
depth, semi-structured interviews with health system leaders and practicing physicians. The proposed research
is innovative, in the applicants' opinion, because it fills critical gaps about whether, which, and how health
system acquisitions improve care for medically complex patients. It will also build on AHRQ's prior investment
in developing a Compendium of U.S. Health Systems, and make an expanded database publicly available for
other researchers to use. The project is significant because it will provide rigorous evidence on the impact of
vertical integration across a range of quality, utilization, and spending outcomes and will identify strategies that
may improve the design of health systems to create a higher value medical system.

Grant Number: 5R01HS029012-03
NIH Institute/Center: AHRQ
Principal Investigator: Amelia Bond