When entities at different levels of the health care supply chain combine, such as when hospitals or health systems acquire physician practices, that’s called vertical integration – and it’s been happening with growing frequency over the past decade. Theoretically, vertical integration should improve quality, reduce cost and enhance the patient experience. However, recent data show that, in many cases, the opposite might actually be occurring. A study published in Health Affairs earlier this month examined the impact of vertical integration on referral patterns. They found that when physicians are integrated with hospital systems, patients are more likely to obtain routine imaging and diagnostic tests in a hospital setting instead of in outpatient facilities.
The result of this trend is concerning for employers, as it results in substantial cost increases. Additionally, the patient experience, including access and time required, is often inferior in a hospital setting for these types of services. This phenomenon is particularly problematic in primary care, which represents only 5-10% of total healthcare spend, yet influences the other 90%.
Employers cannot control whether the primary care providers (PCPs) in their network are independent or employed by a hospital system. However, there are ways in which employers can influence which PCPs their members see.
First, employers can identify whether their employees are utilizing cost-effective and quality providers. Mercer’s QualPic evaluates the efficiency of an employer’s network and quantifies the impact of redirecting services to higher-value providers. If gaps are identified, employers then could consider implementing an “advanced primary care” strategy to ensure plan members are attributed to an appropriate, high-quality PCP. Advanced primary care centers on a continuous, coordinated, multi-disciplinary team with a patient-centric approach, and uses a direct payment model. The focus is on prevention, care coordination, and robust connections with both community-based services and other employer-sponsored programs. An advanced primary care approach can be designed in many different ways to achieve the important goal of ensuring your members receive the best, and most cost-effective, care.
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