[Skip to Content]
Outline
Claim CME
PDF
Health Policy

Organization and Performance of US Health Systems

To identify the key insights or developments described in this article
1 Credit CME
JAMA
Published Online: January 24/31, 2023
Special Communication
Nancy D. Beaulieu, PhD1;
Michael E. Chernew, PhD1,2;
J. Michael McWilliams, MD, PhD1,3;
Mary Beth Landrum, PhD1;
Maurice Dalton, MA2;
Angela Yutong Gu, MA2;
Michael Briskin, BA2;
Rachel Wu, BA2;
Zakaria El Amrani El Idrissi, BA2;
Helene Machado, BS2;
Andrew L. Hicks, MA1;
David M. Cutler, PhD2,4
Author Affiliations
  • 1Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
  • 2National Bureau of Economic Research, Cambridge, Massachusetts
  • 3Division of General Internal Medicine, Department of Medicine, Brigham and Women’s Hospital, Boston, Massachusetts
  • 4Department of Economics, Harvard University, Cambridge, Massachusetts
Read article on JAMA Network

MOC/CME Information

editorial comment icon
Editorial
Comment
 related articles icon
Related
Articles
 author interview icon
Interviews
 multimedia icon
Multimedia
Read Article Claim CME
Abstract

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.

Sign in to take quiz and track your certificates

Buy This Activity

JN Learning™ is the home for CME and MOC from the JAMA Network. Search by specialty or US state and earn AMA PRA Category 1 Credit(s)™ from articles, audio, Clinical Challenges and more. Learn more about CME/MOC

Related Articles

  1. Hospitals, Market Share, and Consolidation

  2. Building Health Care Better Means Reining in Costs

  3. Administrative Simplification and the Potential for Saving a Quarter-Trillion Dollars in Health Care

  4. Disentangling the Role of Health Care Systems in Producing High-Quality Care

  5. Health Systems—The Present and the Future

See More

CME Disclosure Statement: Unless noted, all individuals in control of content reported no relevant financial relationships. If applicable, all relevant financial relationships have been mitigated.

See More About

Health Care Reform Health Care Economics, Insurance, Payment Health Care Quality Health Policy
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.

References
1.
Nikpay  SS , Richards  MR , Penson  D .  Hospital-physician consolidation accelerated in the past decade in cardiology, oncology.   Health Aff (Millwood). 2018;37(7):1123-1127. doi:10.1377/hlthaff.2017.1520 PubMedGoogle ScholarCrossref
2.
Furukawa  MF , Kimmey  L , Jones  DJ , Machta  RM , Guo  J , Rich  EC .  Consolidation of providers into health systems increased substantially, 2016-18.   Health Aff (Millwood). 2020;39(8):1321-1325. doi:10.1377/hlthaff.2020.00017 PubMedGoogle ScholarCrossref
3.
Fulton  BD .  Health care market concentration trends in the United States: evidence and policy responses.   Health Aff (Millwood). 2017;36(9):1530-1538. doi:10.1377/hlthaff.2017.0556 PubMedGoogle ScholarCrossref
4.
Gaynor  M . Health care industry consolidation: statement before the Committee on Ways and Means Health Subcommittee of the US House of Representatives. September 9, 2011. Accessed October 21, 2020. https://www.researchgate.net/publication/287266587_Statement_of_Martin_Gaynor_professor_Carnegie_Mellon_University_Hearing_on_health_care_industry_consolidation
5.
Physician Advocacy Institute. PAI-Avalere health report on trends in physician employment and acquisitions of medical practices: 2019-2021. Accessed May 26, 2022. http://www.physiciansadvocacyinstitute.org/PAI-Research/Physician-Employment-and-Practice-Acquisitions-Trends-2019-21
6.
Kronick  R .  The promise and peril of health systems.   Health Serv Res. 2020;55(Suppl 3)(suppl 3):1027-1030. doi:10.1111/1475-6773.13595 PubMedGoogle ScholarCrossref
7.
Goldsmith  J , Burns  LR , Sen  A , Goldsmith  T .  Integrated Delivery Networks: In Search of Benefits and Market Effects. National Academy of Social Insurance; 2015.
8.
Neprash  HT , McWilliams  JM .  Provider consolidation and potential efficiency gains: a review of theory and evidence.   Antitrust Law J. 2019;82(2):551-578.Google Scholar
9.
Post  B , Buchmueller  T , Ryan  AM .  Vertical integration of hospitals and physicians: economic theory and empirical evidence on spending and quality.   Med Care Res Rev. 2018;75(4):399-433. doi:10.1177/1077558717727834 PubMedGoogle ScholarCrossref
10.
Casalino  LP , Ramsay  P , Baker  LC , Pesko  MF , Shortell  SM .  Medical group characteristics and the cost and quality of care for Medicare beneficiaries.   Health Serv Res. 2018;53(6):4970-4996. doi:10.1111/1475-6773.13010 PubMedGoogle ScholarCrossref
11.
Kralewski  J , Dowd  B , Knutson  D , Tong  J , Savage  M .  The relationships of physician practice characteristics to quality of care and costs.   Health Serv Res. 2015;50(3):710-729. doi:10.1111/1475-6773.12242 PubMedGoogle ScholarCrossref
12.
Baker  LC , Pesko  M , Ramsay  P , Casalino  LP , Shortell  SM .  Are changes in medical group practice characteristics over time associated with Medicare spending and quality of care?   Med Care Res Rev. 2020;77(5):402-415. doi:10.1177/1077558718812939 PubMedGoogle ScholarCrossref
13.
McWilliams  JM , Chernew  ME , Zaslavsky  AM , Hamed  P , Landon  BE .  Delivery system integration and health care spending and quality for Medicare beneficiaries.   JAMA Intern Med. 2013;173(15):1447-1456. doi:10.1001/jamainternmed.2013.6886 PubMedGoogle ScholarCrossref
14.
Baker  LC , Bundorf  MK , Kessler  DP .  Vertical integration: hospital ownership of physician practices is associated with higher prices and spending.   Health Aff (Millwood). 2014;33(5):756-763. doi:10.1377/hlthaff.2013.1279 PubMedGoogle ScholarCrossref
15.
Whaley  CM , Zhao  X , Richards  M , Damberg  CL .  Higher Medicare spending on imaging and lab services after primary care physician group vertical integration.   Health Aff (Millwood). 2021;40(5):702-709. doi:10.1377/hlthaff.2020.01006 PubMedGoogle ScholarCrossref
16.
Neprash  HT , Chernew  ME , Hicks  AL , Gibson  T , McWilliams  JM .  Association of financial integration between physicians and hospitals with commercial health care prices.   JAMA Intern Med. 2015;175(12):1932-1939. doi:10.1001/jamainternmed.2015.4610 PubMedGoogle ScholarCrossref
17.
Koch  TG , Wendling  BW , Wilson  NE .  How vertical integration affects the quantity and cost of care for Medicare beneficiaries.   J Health Econ. 2017;52:19-32. doi:10.1016/j.jhealeco.2016.12.007 PubMedGoogle ScholarCrossref
18.
Capps  C , Dranove  D , Ody  C .  The effect of hospital acquisitions of physician practices on prices and spending.   J Health Econ. 2018;59:139-152. doi:10.1016/j.jhealeco.2018.04.001 PubMedGoogle ScholarCrossref
19.
Carlin  CS , Feldman  R , Dowd  B .  The impact of provider consolidation on physician prices.   Health Econ. 2017;26(12):1789-1806. doi:10.1002/hec.3502 PubMedGoogle ScholarCrossref
20.
Casalino  LP , Pesko  MF , Ryan  AM ,  et al.  Small primary care physician practices have low rates of preventable hospital admissions.   Health Aff (Millwood). 2014;33(9):1680-1688. doi:10.1377/hlthaff.2014.0434 PubMedGoogle ScholarCrossref
21.
Bishop  TF , Shortell  SM , Ramsay  PP , Copeland  KR , Casalino  LP .  Trends in hospital ownership of physician practices and the effect on processes to improve quality.   Am J Manag Care. 2016;22(3):172-176.PubMedGoogle Scholar
22.
Koch  TG , Wendling  BW , Wilson  NE .  The effects of physician and hospital integration on Medicare beneficiaries’ health outcomes.   Rev Econ Stat. 2021;103(4):725-739.Google Scholar
23.
Beaulieu  ND , Dafny  LS , Landon  BE , Dalton  JB , Kuye  I , McWilliams  JM .  Changes in quality of care after hospital mergers and acquisitions.   N Engl J Med. 2020;382(1):51-59. doi:10.1056/NEJMsa1901383 PubMedGoogle ScholarCrossref
24.
Colla  C , Yang  W , Mainor  AJ ,  et al.  Organizational integration, practice capabilities, and outcomes in clinically complex medicare beneficiaries.   Health Serv Res. 2020;55(Suppl 3)(suppl 3):1085-1097. doi:10.1111/1475-6773.13580 PubMedGoogle ScholarCrossref
25.
Fisher  ES , Shortell  SM , O’Malley  AJ ,  et al.  Financial integration’s impact on care delivery and payment reforms: a survey of hospitals and physician practices.   Health Aff (Millwood). 2020;39(8):1302-1311. doi:10.1377/hlthaff.2019.01813 PubMedGoogle ScholarCrossref
26.
Kranz  AM , DeYoreo  M , Eshete-Roesler  B ,  et al.  Health system affiliation of physician organizations and quality of care for Medicare beneficiaries who have high needs.   Health Serv Res. 2020;55(Suppl 3)(suppl 3):1118-1128. doi:10.1111/1475-6773.13570 PubMedGoogle ScholarCrossref
27.
O’Hanlon  CE , Kranz  AM , DeYoreo  M , Mahmud  A , Damberg  CL , Timbie  J .  Access, quality, and financial performance of rural hospitals following health system affiliation.   Health Aff (Millwood). 2019;38(12):2095-2104. doi:10.1377/hlthaff.2019.00918 PubMedGoogle ScholarCrossref
28.
Zhou  RA , Beaulieu  ND , Cutler  D .  Primary care quality and cost for privately insured patients in and out of US health systems: evidence from four states.   Health Serv Res. 2020;55(Suppl 3)(suppl 3):1098-1106. doi:10.1111/1475-6773.13590 PubMedGoogle ScholarCrossref
29.
Ahluwalia  SC , Damberg  CL , Silverman  M , Motala  A , Shekelle  PG .  What defines a high-performing health care delivery system: a systematic review.   Jt Comm J Qual Patient Saf. 2017;43(9):450-459. doi:10.1016/j.jcjq.2017.03.010 PubMedGoogle ScholarCrossref
30.
Machta  RM , Reschovsky  J , Jones  DJ , Furukawa  MF , Rich  EC .  Can vertically integrated health systems provide greater value: the case of hospitals under the comprehensive care for joint replacement model?   Health Serv Res. 2020;55(4):541-547. doi:10.1111/1475-6773.13313 PubMedGoogle ScholarCrossref
31.
Norton  PT , Rodriguez  HP , Shortell  SM , Lewis  VA .  Organizational influences on healthcare system adoption and use of advanced health information technology capabilities.   Am J Manag Care. 2019;25(1):e21-e25.PubMedGoogle Scholar
32.
Poon  BY , Shortell  S , Rodriguez  HP .  Physician practice transitions to system ownership do not result in diminished practice responsiveness to patients.   Health Serv Res. 2018;53(4):2268-2284. doi:10.1111/1475-6773.12804 PubMedGoogle ScholarCrossref
33.
Rodriguez  HP , Kyalwazi  MJ , Lewis  VA , Rubio  K , Shortell  SM .  Adoption of patient-reported outcomes by health systems and physician practices in the USA.   J Gen Intern Med. 2022;37(15):3885-3892. doi:10.1007/s11606-022-07631-0PubMedGoogle ScholarCrossref
34.
Timbie  JW , Kranz  AM , DeYoreo  M ,  et al.  Racial and ethnic disparities in care for health system-affiliated physician organizations and non-affiliated physician organizations.   Health Serv Res. 2020;55(Suppl 3)(suppl 3):1107-1117. doi:10.1111/1475-6773.13581 PubMedGoogle ScholarCrossref
35.
Dartmouth Atlas Project. Research methods. Accessed November 2, 2022. https://www.dartmouthatlas.org/research-methods/
36.
Agency for Healthcare Research and Quality. Comparative Health System Performance Initiative. Accessed October 21, 2022. https://www.ahrq.gov/chsp/chsp-reports/resources-for-understanding-health-systems/defining-health-systems.html
37.
Schwartz  AL , Zaslavsky  AM , Landon  BE , Chernew  ME , McWilliams  JM .  Low-value service use in provider organizations.   Health Serv Res. 2018;53(1):87-119. doi:10.1111/1475-6773.12597 PubMedGoogle ScholarCrossref
38.
Machta  RM , D Reschovsky  J , Jones  DJ , Kimmey  L , Furukawa  MF , Rich  EC .  Health system integration with physician specialties varies across markets and system types.   Health Serv Res. 2020;55(Suppl 3)(suppl 3):1062-1072. doi:10.1111/1475-6773.13584 PubMedGoogle ScholarCrossref
39.
Furukawa  MF , Machta  RM , Barrett  KA ,  et al.  Landscape of health systems in the United States.   Med Care Res Rev. 2020;77(4):357-366. doi:10.1177/1077558718823130 PubMedGoogle ScholarCrossref
40.
Kimmey  L , Furukawa  MF , Jones  DJ , Machta  RM , Guo  J , Rich  EC .  Geographic variation in the consolidation of physicians into health systems, 2016-18.   Health Aff (Millwood). 2021;40(1):165-169. doi:10.1377/hlthaff.2020.00812 PubMedGoogle ScholarCrossref
41.
Cooper  Z , Craig  SV , Gaynor  M , Van Reenen  J .  The price ain’t right? hospital prices and health spending on the privately insured.   Q J Econ. 2019;134(1):51-107. doi:10.1093/qje/qjy020 PubMedGoogle ScholarCrossref
42.
Schneider  JE , Li  P , Klepser  DG , Peterson  NA , Brown  TT , Scheffler  RM .  The effect of physician and health plan market concentration on prices in commercial health insurance markets.   Int J Health Care Finance Econ. 2008;8(1):13-26. doi:10.1007/s10754-007-9029-4 PubMedGoogle ScholarCrossref
43.
Sun  E , Baker  LC .  Concentration in orthopedic markets was associated with a 7 percent increase in physician fees for total knee replacements.   Health Aff (Millwood). 2015;34(6):916-921. doi:10.1377/hlthaff.2014.1325 PubMedGoogle ScholarCrossref
44.
Agency for Healthcare Research and Quality. Compendium of US health systems. Accessed June 1, 2022. https://www.ahrq.gov/chsp/data-resources/compendium.html
45.
Kerrissey  MJ , Clark  JR , Friedberg  MW ,  et al.  Medical group structural integration may not ensure that care is integrated, from the patient’s perspective.   Health Aff (Millwood). 2017;36(5):885-892. doi:10.1377/hlthaff.2016.0909 PubMedGoogle ScholarCrossref
46.
Lyu  PF , Chernew  ME , McWilliams  JM .  Soft consolidation in Medicare ACOs: potential for higher prices without mergers or acquisitions.   Health Aff (Millwood). 2021;40(6):979-988. doi:10.1377/hlthaff.2020.02449 PubMedGoogle ScholarCrossref
47.
Comfort  LN , Shortell  SM , Rodriguez  HP , Colla  CH .  Medicare accountable care organizations of diverse structures achieve comparable quality and cost performance.   Health Serv Res. 2018;53(4):2303-2323. doi:10.1111/1475-6773.12829 PubMedGoogle ScholarCrossref
48.
Ridgely  MS , Timbie  J , Duffy  E , Wolf  L , Buttorff  C .  Consolidation by any other name? the emergence of clinically integrated networks.   Health Serv Res. 2020;55(S1):114-14. doi:10.1111/1475-6773.13493 Google ScholarCrossref
AMA CME Accreditation Information

Credit Designation Statement: The American Medical Association designates this Journal-based CME activity activity for a maximum of 1.00  AMA PRA Category 1 Credit(s)™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.

Successful completion of this CME activity, which includes participation in the evaluation component, enables the participant to earn up to:

  • 1.00 Medical Knowledge MOC points in the American Board of Internal Medicine's (ABIM) Maintenance of Certification (MOC) program;;
  • 1.00 Self-Assessment points in the American Board of Otolaryngology – Head and Neck Surgery’s (ABOHNS) Continuing Certification program;
  • 1.00 MOC points in the American Board of Pediatrics’ (ABP) Maintenance of Certification (MOC) program;
  • 1.00 Lifelong Learning points in the American Board of Pathology’s (ABPath) Continuing Certification program; and
  • 1.00 CME points in the American Board of Surgery’s (ABS) Continuing Certification program

It is the CME activity provider's responsibility to submit participant completion information to ACCME for the purpose of granting MOC credit.

Close
Want full access to the AMA Ed Hub?
Become an AMA member now
After you sign up for AMA Membership, make sure you sign in or create a Physician account with the AMA in order to access all learning activities on the AMA Ed Hub
Buy this activity
Close
Want full access to the AMA Ed Hub?
Become an AMA member now
After you sign up for AMA Membership, make sure you sign in or create a Physician account with the AMA in order to access all learning activities on the AMA Ed Hub
Buy this activity
Close
With a personal account, you can:
  • Access free activities and track your credits
  • Personalize content alerts
  • Customize your interests
  • Fully personalize your learning experience
Education Center Collection Sign In Modal Right
Close

Name Your Search

Save Search
With a personal account, you can:
  • Access free activities and track your credits
  • Personalize content alerts
  • Customize your interests
  • Fully personalize your learning experience
Close
Close

Lookup An Activity

or

My Saved Searches

You currently have no searches saved.

Close

My Saved Courses

You currently have no courses saved.

Close
Our website uses cookies to enhance your experience. By continuing to use our site, or clicking "Continue," you are agreeing to our Cookie Policy | Continue