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Organization and Performance of US Health Systems

To identify the key insights or developments described in this article
1 Credit CME

Importance  Health systems play a central role in the delivery of health care, but relatively little is known about these organizations and their performance.

Objective  To (1) identify and describe health systems in the United States; (2) assess differences between physicians and hospitals in and outside of health systems; and (3) compare quality and cost of care delivered by physicians and hospitals in and outside of health systems.

Evidence Review  Health systems were defined as groups of commonly owned or managed entities that included at least 1 general acute care hospital, 10 primary care physicians, and 50 total physicians located within a single hospital referral region. They were identified using Centers for Medicare & Medicaid Services administrative data, Internal Revenue Service filings, Medicare and commercial claims, and other data. Health systems were categorized as academic, public, large for-profit, large nonprofit, or other private systems. Quality of preventive care, chronic disease management, patient experience, low-value care, mortality, hospital readmissions, and spending were assessed for Medicare beneficiaries attributed to system and nonsystem physicians. Prices for physician and hospital services and total spending were assessed in 2018 commercial claims data. Outcomes were adjusted for patient characteristics and geographic area.

Findings  A total of 580 health systems were identified and varied greatly in size. Systems accounted for 40% of physicians and 84% of general acute care hospital beds and delivered primary care to 41% of traditional Medicare beneficiaries. Academic and large nonprofit systems accounted for a majority of system physicians (80%) and system hospital beds (64%). System hospitals were larger than nonsystem hospitals (67% vs 23% with >100 beds), as were system physician practices (74% vs 12% with >100 physicians). Performance on measures of preventive care, clinical quality, and patient experience was modestly higher for health system physicians and hospitals than for nonsystem physicians and hospitals. Prices paid to health system physicians and hospitals were significantly higher than prices paid to nonsystem physicians and hospitals (12%-26% higher for physician services, 31% for hospital services). Adjusting for practice size attenuated health systems differences on quality measures, but price differences for small and medium practices remained large.

Conclusions and Relevance  In 2018, health system physicians and hospitals delivered a large portion of medical services. Performance on clinical quality and patient experience measures was marginally better in systems but spending and prices were substantially higher. This was especially true for small practices. Small quality differentials combined with large price differentials suggests that health systems have not, on average, realized their potential for better care at equal or lower cost.

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Article Information

Corresponding Author: Nancy Beaulieu, PhD, Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02115 (beaulieu@hcp.med.harvard.edu).

Accepted for Publication: December 12, 2022.

Author Contributions: Drs Beaulieu and Cutler had full access to all of the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Beaulieu, McWilliams, Chernew, Cutler.

Acquisition, analysis, or interpretation of data: Beaulieu, McWilliams, Landrum, Cutler, Hicks, Dalton, Briskin, Gu, Wu, El Amrani El Idrissi, Machado.

Drafting of the manuscript: Beaulieu, Cutler, Dalton, Gu.

Critical revision of the manuscript for important intellectual content: Beaulieu, McWilliams, Chernew, Landrum, Cutler, Hicks, Briskin, Wu, El Amrani El Idrissi, Machado.

Statistical analysis: Beaulieu, McWilliams, Landrum, Cutler, Hicks, Dalton, Briskin, Gu, Wu, El Amrani El Idrissi, Machado.

Obtained funding: Cutler.

Administrative, technical, or material support: Beaulieu, Cutler, El Amrani El Idrissi.

Supervision: Beaulieu, Cutler.

Conflict of Interest Disclosures: Dr Beaulieu reported receiving grants from Arnold Ventures, Ballad Health, and the Commonwealth Fund. Dr Chernew reported receiving grants from Arnold Ventures, Ballad Health, and the Commonwealth Fund; equity from VBID and Waymark Inc; personal fees from Health at Scale, Virta, National Institute for Health Care Management, MITRE, the Medicare Payment Advisory Commission, and American Medical Association, as well as serving on an advisory board for the Congressional Budget Office and the Medicare Payment Advisory Commission outside the submitted work. Dr McWilliams reported receiving grants from Arnold Ventures and the Commonwealth Fund and personal fees from Abt Associates, Blue Cross Blue Shield of North Carolina, RTI International, Oak Ridge Associated Universities, the ACI Group, Analysis Group, and JAMA Internal Medicine. Dr Cutler reported receiving personal fees from multidistrict litigation with respect to opioids and JUUL and serving as a commissioner of the Health Policy Commission in Massachusetts. No other disclosures were reported.

Funding/Support: This study was supported by a grant from the Agency for Healthcare Research and Quality (AHRQ) U19HS024072).

Role of the Funder/Sponsor: The funder had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

Disclaimer: The content is solely the responsibility of the authors and does not necessarily represent the official views of the AHRQ.

Additional Contributions: Brian Young, MPH (National Bureau of Economic Research), and Lin Ding, PhD (Department of Health Care Policy, Harvard Medical School), made valuable and critical contributions to creating the Health Systems and Provider Database and conducting analyses for this article. They did not receive separate compensation apart from the AHRQ grant that funded the study.

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