Farzad Mostashari is a visiting fellow at the Duke-Margolis Health Policy Center at Duke University and co-founder and CEO of Aledade, a company that helps independent primary care practices operate as accountable care organizations in value-based contracts.

The announcement this week of California Attorney General Xavier Becerra as Joe Biden’s nominee to lead HHS has many in the health policy world talking about consolidation. Last year, Becerra sued Sutter Health, one of the country’s biggest integrated health systems, over anti-competitive practices, leading to a $575 million settlement.

Hospitals and physician practices have been moving steadily toward more consolidation for years, and now the pandemic could be an accelerant tossed onto the fire. When COVID-19 hit, patients stayed home and revenue through traditional fee-for-service payments dropped through the floor. Some independent practices are already considering consolidation to weather the financial storm, and experts expect more to do so in the near future. 

A large body of research has shown that hospital and physician practice consolidation leads to higher prices, but defenders of consolidation say integration provides for more efficient and higher quality care. There’s less research consensus on this topic, but a new paper published this week in the journal Health Services Research adds to the evidence against this argument.

Researchers from UCLA and RAND looked at more than 2.3 million Medicare patients with high needs (defined as having more than twice the expected spending of an average Medicare beneficiary) and compared six quality measures between physician practices that either were or were not affiliated with a larger health system. In most measures, the researchers found small and often statistically insignificant differences, and in one, rates of emergency room visits, patients in a large health system were statistically significantly more likely to visit the ER than patients of non-affiliated providers. In other words, the quality of health care provided by the large health systems was at best no different and in some cases even worse from providers who weren’t in large systems, even for high-need patients who the authors theorized could most benefit from access to integrated providers.

These results are little comfort to smaller providers struggling to keep their doors open through the pandemic. But they do serve as a reminder that based on the evidence, when a practice joins a health system it is more likely to increase costs for its community than improve the quality of care it can offer its patients. If policymakers and payers want to prevent further consolidation, the study authors suggest that paying practices based on the quality of care they provide rather than volume is one way to do so, with data showing nearly 7 times greater savings for independent practices vs. health systems in one value-based care model.