The Merger Guidelines apply equally to acquisitions, so it is natural to ask about the potential impact of the revised Merger Guidelines on the growing trend of hospital acquisitions of physician practices. That question is asked and expanded, if not quite answered, in the March 9 issue of the New England Journal of Medicine in a piece by Dhruv Khullar, M.D., M.P.P., Lawrence P. Casalino, M.D., Ph.D., and Amelia M. Bond, Ph.D.: "Vertical Integration and the Transformation of American Medicine," available for free here (HTML) and here (PDF).
The article identifies three broad areas of concern that will require a more nuanced approach fueled by a close factual inquiry in each case under review:
First, are the effects of vertical integration influenced by the form that the resulting health system takes? The Agency for Healthcare Research and Quality has defined a health system as an organization that has at least one hospital and at least one physician practice that provides comprehensive care, with the entities operating under common ownership or management. This broad definition is useful for systematically tracking growth in the number of health systems, but it masks tremendous heterogeneity in size, geography, not-for-profit versus for-profit status, provider specialties, and leadership structure. . . .
Second, how do practice acquisitions affect clinicians? Traditionally, antitrust agencies judging whether to challenge a proposed merger or acquisition have focused on prices paid by consumers. In recent years, however, they have started to take a more expansive view of potential benefits and harms. The new guidelines address the extent to which a merger lessens competition for workers and could result in lower wages, worse benefits, or poorer workplace conditions. Research on vertical integration in health care could examine its consequences for clinicians. Many clinicians may be satisfied after their practice is acquired; they may, for example, have an improved work–life balance, receive greater administrative support, and be relieved of managing the business-related aspects of medicine. Alternatively, they may work longer hours, have less autonomy and constrained job mobility, and experience more burnout or moral injury.
Third, and most important, when hospitals acquire practices, which patients benefit, and which are harmed? The effects of vertical integration are likely to vary depending on the medical and social needs of a health system’s patients. Patients who have multiple coexisting conditions and require frequent interactions with the health care system may be especially affected by changes in care protocols and referral networks after practice acquisitions. The types of practices that hospitals target also matters. The guidelines call attention to the potential for merged entities to limit access to products or services that rivals need to compete. It’s possible that in preferentially acquiring profitable practices, hospitals leave patients in poorly resourced practices worse off by weakening those practices’ leverage in negotiations with insurers, deprioritizing referrals for their patients, or hiring away their clinicians and staff. Future research could examine the effects of acquisitions not only on patients at practices that are acquired by hospitals, but also on patients at practices that, for whatever reason, are not.
The concluding paragraph summarizes the authors' concerns:
The rapid acquisition of physician practices by hospitals highlights an important tension in health care — between the possibility that integration can promote efficiency and improved quality and the concern that it distorts markets and can worsen health and financial outcomes. This tension reflects the conflicting values of coordination and competition. Resolving it — determining whether, how, and when regulators should act — will require a more nuanced understanding of the consequences of these acquisitions for patients, families, and clinicians.
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