WCRI: Consolidation of Health Care Leads to Higher Costs, Longer Disability Duration

Consolidation of health care services into large corporations that own hospitals, clinics and physician practices may hold the promise of more efficient and better-integrated care, but hasn’t led to better outcomes for workers’ compensation patients, according to a new study by the Workers’ Compensation Research Institute.

After analyzing medical payments and the duration of temporary disability for injured workers in 34 states over a six-year period, WCRI researchers concluded that consolidation — also called vertical integration — leads to higher costs and slower return to work.

“What we are finding is employers are paying more but workers are spending longer times away from work,” said WCRI senior policy analyst Bodgan Savych, who conducted the study along with economist Olesya Fomenko.

In recent years, US health care has become more concentrated into large health systems, often owned by hospitals, that consolidate independent physician practices and laboratory and other diagnostic services under single ownership. Numerous studies suggest that consolidation hasn’t benefited patients.

One study published in September by JAMA Health Forum, Harvard University researchers concluded that vertical integration is associated with increased use of specialists and increased spending without any change in hospital readmission rates. A University of Southern California study published in March found that vertical integration increased costs for Medicare Advantage plans by 4.6%.

Concerned about the impact on competition, the Federal Trade Commission and the Department of Justice’s Antitrust Division earlier this year published proposed guidelines that would impose more scrutiny on corporate mergers.

The WCRI study is the first to examine the impact of vertical integration to workers’ compensation. The researchers compared two groups of patients, each at six months and 12 months of claim maturity, who received care from 2012 to 2018. One group was treated by “vertically integrated” health care systems and the other was treated by independent practices.

The comparison, for all injuries, showed the cost of care by vertically-integrated providers was 7.3% more expensive at six months of claim maturity and 11. 4% more expensive at 12 months. The difference was more stark for low-back pain cases: 15.2% more expensive at six months and 21.9% more expensive at 12 months.

Patients treated by vertically integrated providers also took longer to return to work. For all injuries, temporary disability duration was 10.1 weeks at six months maturity, 6.8% longer than duration for workers treated by independent providers. Average duration was 14.8% weeks for all injuries at 12 months maturity, 10.1% longer.

Outcomes, again, were worse for low back pain cases. Temporary disability was 14.5% longer at six months maturity and 25.7% at 12 months.

The research showed patients treated at consolidated facilities had more visits with medical providers, received more treatments during each visit and received care that was more often coded as complex and therefore more expensive. Patients also saw a wider variety of provider types, such as a nurse practioner or physician assistant in addition to a medical doctor.

Savych said the structure of vertically integrated organizations can slow down care. For example, a patient who is seen by a nurse practioner may have make an extra visit to a doctor before they are cleared to return to work. Also, medical providers can easily order more tests or other types of therapy because all of the services are offered at one place. Often when providers enter patient data, they receive prompts from the institution’s software asking whether more tests or services are needed, he said.

Patients treated at consolidated facilities also received more diagnostic imaging scans, including more MRIs taken earlier than called for by evidence-based medical treatment guidelines.

Savych said studies have show that MRIs taken too early can prompt unnecessary care. He said often the scans will show abnormalities that result in treatment but if undetected would have resolved by themselves over time.

Dr. Steven Feinberg, a treating physician in Palo Alto, California, said he doesn’t believe the structure of vertically integrated facilities by itself causes the more expensive and extensive care noted by the WCRI researchers. He said his practice employs a variety of physicians, including a psychologist, so that it can offer patients a well-integrated functional restoration program that conforms to California’s Medical Treatment Utilization Schedule (treatment guidelines.)

Feinberg said human behavior leads to the negative outcomes. “Greed,” he said.

“Unfortunately, I do see in some large groups, considerable unnecessary care being prescribed because of what I consider to be financial incentives (which of course drive behaviors),” he said in an email. “An example, in California workers’ compensation, because acupuncture and chiropractic are supported by the MTUS, many groups have hired chiropractors and acupuncturist, and the services appear to be routinely provided because they are MTUS compliant.”

Elaborating later during a telephone interview, Feinberg said consolidation of health care organizations can take a toll on physicians.

“The treating doctors aren’t as happy as they used to be,” he said.

“When you are no longer seeing patients and you’re in the corporate world, your focus changes,” Feinberg said. “You look at the world differently. You start counting beans.”

San Diego chiropractor Wayne Whalen said in an email that he is very familiar with the “formulaic” and “cursory” care that is often given by large occupational medical centers. He said many of his patients tell him that they received ineffective and disjointed treatment at such facilities.

“When I have had an opportunity to provide spinal manipulation to patients who purportedly had chiropractic care previously at these facilities, they are surprised when I actually adjust them, and tell me, ‘they never did that to me before,'” he said. “Instead they got what we disparagingly refer to as ‘shake and bake’ which generates billing but not results. To add insult to injury, when someone like me asks to provide actually manual manipulation services, they get denied by UR (utilization review) because there was no functional improvement from the substandard chiropractic care they got. Big surprise!”

Whalen said he believes some vertically integrated facilities provide good care, but many do not “and simply order all the devices, services and diagnostics they know will get approved, run patients through conservative care with little personalization, and then move on.”

Both Whalen and Feinberg are board members for the California Society of Industrial Medicine and Surgery, which advocates for medical practitioners in the state’s workers’ compensation system.

The WCRI study can be purchased here.