The Impact of Hospital Acquisition of Physician Practices on Referral Patterns

Hospital behavior over the private equity life cycle

Private equity is an increasing presence in US healthcare, with unclear consequences. Leveraging unique data sources and difference-in-differences designs, we examine the largest private equity hospital takeover in history. The affected hospital chain sharply shifts its advertising strategy and pursues joint ventures with ambulatory surgery centers. Inpatient throughput is increased by allowing more patient transfers, and crucially, capturing more patients through the emergency department. The hospitals also manage shorter, less treatment-intensive stays for admitted patients. Outpatient surgical care volume declines, but remaining cases focus on higher complexity procedures. Importantly, behavior changes persist even after private equity divests.

Effect of patient death on referrals to cardiac specialists

In this paper, I examine how patient death affects referrals from referring physicians to cardiac surgeons. I use Medicare data to identify pairs of referring physicians and cardiac surgeons who experience a patient death after a major surgical procedure to examine how these events affect referrals. I construct counterfactuals for affected pairs using pairs that experience a patient death but five quarters in the future. I find that there is a significant decline in the number of referrals and probability of a referral from the referring physician to the cardiac surgeon after the patient's death.

The Risks and Benefits of Physician Practice Acquisition and Consolidation: A Narrative Review of Peer-Reviewed Publications Between 2009 and 2022 in the United States

The objective of this narrative review was to assess current literature regarding acquisition and consolidation of physician practices in the United States (US). The acquisition and consolidation of physician practices is a trend affecting patient care, quality of services, healthcare economics and the daily practice of physicians. As practices are acquired by fellow physician groups, private equity investors and entities such as hospitals or large healthcare systems, it is important to better understand the underlying forces driving these transactions and their effects. This is a narrative review of peer-reviewed publications to determine what current literature has covered regarding the acquisition and consolidation of physician practices in the US regarding risks and benefits of this trend. Sources included the SCOPUS, Medline- PUBMED and Web of Science databases. Peer reviewed publications from 2009 to 2022 were included for initial review and curation for relevance using the search terms "physician" and "practice" with either "acquisition" or "consolidation". Synthesis conducted after narrowing down of relevant articles did not use quantitative measurements, but instead examined overall trends, as well as risk and benefits of ongoing acquisition and consolidation in a narrative format. Journal articles focused on physician consolidation in the US often reported increases in physician numbers with decreases in numbers of individual practices. Private equity quantitative analyses reported rapidly accelerating acquisitions driven by these investors, and vertical integration scholarly work reported frequent geographic consolidation of nearby practitioners. Risks associated with these transactions included such items as decreased physician autonomy and higher cost of care. Benefits included practice stability, improved negotiation with insurers and improved access to resources.

Gluing Together a Fragmented Healthcare System for Geriatrics Will Be Hard. It's Time for United Action

"Gluing" together integrated Geriatric Clinical Service lines (GCSL) within the US healthcare system is a significant challenge. Reasons encompass health professional workforce shortages, inconsistent requirements for geriatric educational competencies among the health professional disciplines, preconceived ageist attitudes about older adults with complex illnesses, and a US healthcare system infrastructure that is not aligned with longitudinal and interdisciplinary care needs for older adults. This review focuses on three major characteristics of the US healthcare system that have impeded widespread dissemination of GCSLs: 1) the US's historical fee for service (FFS) reimbursement system; 2) increasing reliance upon disease specific specialty care services for older patients that have resulted from advances in medicine; and 3) rising consolidation of US healthcare systems over the last 30 years. Three specific options are also provided that might help change the current and future trajectories of GCSLs: 1) local political advocacy to implement health policy legislation; 2) expand geriatric physician and health professional workforce by nontraditional means; and 3) reprioritize expansionist healthcare systems corporate behavior. Each of these interventions will be hard to achieve, but it is time to unite if GCSLs are to thrive as pathways to improve care outcomes for older adults with complex medical, cognitive and neuropsychiatric disorders.

Gluing together a fragmented healthcare system for geriatrics will be hard. It's time for united action

"Gluing" together integrated Geriatric Clinical Service lines (GCSL) within the US healthcare system is a significant challenge. Reasons encompass health professional workforce shortages, inconsistent requirements for geriatric educational competencies among the health professional disciplines, preconceived ageist attitudes about older adults with complex illnesses, and a US healthcare system infrastructure that is not aligned with longitudinal and interdisciplinary care needs for older adults. This review focuses on three major characteristics of the US healthcare system that have impeded widespread dissemination of GCSLs: (1) the US's historical fee for service (FFS) reimbursement system; (2) increasing reliance upon disease specific specialty care services for older patients that have resulted from advances in medicine; and (3) rising consolidation of US healthcare systems over the last 30 years. Three specific options are also provided that might help change the current and future trajectories of GCSLs: (1) local political advocacy to implement health policy legislation; (2) expand geriatric physician and health professional workforce by nontraditional means; and (3) reprioritize expansionist healthcare systems corporate behavior. Each of these interventions will be hard to achieve, but it is time to unite if GCSLs are to thrive as pathways to improve care outcomes for older adults with complex medical, cognitive and neuropsychiatric disorders.

Vertical Integration and Physician Practice Labor Composition

With the growth of vertical integration among physician practices (i.e., hospital-physician integration), there have been many studies of its effects on health care treatments and spending. It is unknown if integration shapes provider configurations, especially against the backdrop of increasing employment of nurse practitioners (NPs) and physician assistants (PAs) across specialties. Using a longitudinal panel of 144,289 practices (2008-2015), we examined the association of vertical integration with NP and PA employment. We find positive associations between vertical integration and newly employing NPs and PAs within physician practices; however, the relationships differ by practice specialty type as well as timing of vertical integration. Supplementary analyses offer supporting evidence for coinciding enhancements to practice productivity, diversification, and provider task allocation. Our results suggest that vertical integration may promote interdisciplinary provider configurations, which has the potential to improve care delivery efficiency.

Treatment consolidation after vertical integration: Evidence from outpatient procedure markets

Hospital ownership of physician practices has grown across the US, and these strategic decisions seem to drive higher prices and spending. Using detailed physician ownership information and a universe of Florida discharge records, we show novel evidence of hospital-physician integration foreclosure effects within outpatient procedure markets. Following hospital acquisition, physicians shift nearly 10% of their Medicare and commercially insured cases away from ambulatory surgery centers (ASCs) to hospitals and are up to 18% less likely to use an ASC at all. Altering physician choices over treatment setting can be in conflict with patient and payer cost, convenience, and quality preferences.

Higher Medicare Spending On Imaging And Lab Services After Primary Care Physician Group Vertical Integration

In recent years direct ownership of physician practices by hospitals and health systems (that is, vertical integration) has become a prominent feature of the US health care system. One unexplored impact of vertical integration is the impact on referral patterns for common diagnostic tests and procedures and the associated spending. Using a 100 percent sample of 2013-16 Medicare fee-for-service claims data, we examined whether hospital and health system ownership of physician practices was associated with changes in site of care and Medicare reimbursement rates for ten common diagnostic imaging and laboratory services. After vertical integration, the monthly number of diagnostic imaging tests per 1,000 attributed beneficiaries performed in a hospital setting increased by 26.3 per 1,000, and the number performed in a nonhospital setting decreased by 24.8 per 1,000. Hospital-based laboratory tests increased by 44.5 per 1,000 attributed beneficiaries, and non-hospital-based laboratory tests decreased by 36.0 per 1,000. Average Medicare reimbursement rose by $6.38 for imaging tests and $0.57 for laboratory tests, which translates to $40.2 million and $32.9 million increases in Medicare spending, respectively, for the entire study period. This study highlights how the growing trend of vertical integration, combined with differences in Medicare payment between hospitals and nonhospital providers, leads to higher Medicare spending.

Do accountable care organizations differ according to physician-hospital integration?: A retrospective observational study

Physician-hospital integration among accountable care organizations (ACOs) has raised concern over impacts on prices and spending. However, characteristics of ACOs with greater integration between physicians and hospitals are unknown. We examined whether ACOs systematically differ by physician-hospital integration among 16 commercial ACOs operating in Massachusetts.Using claims data linked to information on physician affiliation, we measured hospital integration with primary care physicians for each ACO and categorized them into high-, medium-, and low-integrated ACOs. We conducted cross-sectional descriptive analysis to compare differences in patient population, organizational characteristics, and healthcare spending between the three groups. In addition, using multivariate generalized linear models, we compared ACO spending by integration level, adjusting for organization and patient characteristics. We identified non-elderly adults (aged 18-64) served by 16 Massachusetts ACOs over the period 2009 to 2013.High- and medium-integrated ACOs were more likely to be an integrated delivery system or an organization with a large number of providers. Compared to low-integrated ACOs, higher-integrated ACOs had larger inpatient care capacity, smaller composition of primary care physicians, and were more likely to employ physicians directly or through an affiliated hospital or physician group. A greater proportion of high-/medium-integrated ACO patients lived in affluent neighborhoods or areas with a larger minority population. Healthcare spending per enrollee in high-integrated ACOs was higher, which was mainly driven by a higher spending on outpatient facility services.This study shows that higher-integrated ACOs differ from their counterparts with low integration in many respects including higher healthcare spending, which persisted after adjusting for organizational characteristics and patient mix. Further investigation into the effects of integration on expenditures will inform the ongoing development of ACOs.

Reschovsky J, Jones DJ, Kimmey L, Furukawa MF, Rich EC. Health system integration with physician specialties varies across markets and system types

OBJECTIVE

To examine system integration with physician specialties across markets and the association between local system characteristics and their patterns of physician integration.

DATA SOURCES

Data come from the AHRQ Compendium of US Health Systems and IQVIA OneKey database.

STUDY DESIGN

We examined the change from 2016 to 2018 in the percentage of physicians in systems, focusing on primary care and the 10 most numerous nonhospital-based specialties across the 382 metropolitan statistical areas (MSAs) in the US. We also categorized systems by ownership, mission, and payment program participation and examined how those characteristics were related to their patterns of physician integration in 2018.

DATA COLLECTION/EXTRACTION METHODS

We examined local healthcare markets (MSAs) and the hospitals and physicians that are part of integrated systems that operate in these markets. We characterized markets by hospital and insurer concentration and systems by type of ownership and by whether they have an academic medical center (AMC), a 340B hospital, or accountable care organization.

PRINCIPAL FINDINGS

Between 2016 and 2018, system participation increased for primary care and the 10 other physician specialties we examined. In 2018, physicians in specialties associated with lucrative hospital services were the most commonly integrated with systems including hematology-oncology (57%), cardiology (55%), and general surgery (44%); however, rates varied substantially across markets. For most specialties, high market concentration by insurers and hospital-systems was associated with lower rates of physician integration. In addition, systems with AMCs and publicly owned systems more commonly affiliated with specialties unrelated to the physicians' potential contribution to hospital revenue, and investor-owned systems demonstrated more limited physician integration.

CONCLUSIONS

Variation in physician integration across markets and system characteristics reflects physician and systems' motivations. These integration strategies are associated with the financial interests of systems and other strategic goals (eg, medical education, and serving low-income populations).

Racial and ethnic disparities in care for health system-affiliated physician organizations and non-affiliated physician organizations

OBJECTIVE

To assess racial and ethnic disparities in care for Medicare fee-for-service (FFS) beneficiaries and whether disparities differ between health system-affiliated physician organizations (POs) and nonaffiliated POs.

DATA SOURCES

We used Medicare Data on Provider Practice and Specialty (MD-PPAS), Medicare Provider Enrollment, Chain, and Ownership System (PECOS), IRS Form 990, 100% Medicare FFS claims, and race/ethnicity estimated using the Medicare Bayesian Improved Surname Geocoding 2.0 algorithm.

STUDY DESIGN

Using a sample of 16 007 POs providing primary care in 2015, we assessed racial/ethnic disparities on 12 measures derived from claims (2 cancer screenings; diabetic eye examinations; continuity of care; two medication adherence measures; three measures of follow-up visits after acute care; all-cause emergency department (ED) visits, all-cause readmissions, and ambulatory care-sensitive admissions). We decomposed these "total" disparities into within-PO and between-PO components using models with PO random effects. We then pair-matched 1853 of these POs that were affiliated with health systems to similar nonaffiliated POs. We examined differences in within-PO disparities by affiliation status by interacting each nonwhite race/ethnicity with an affiliation indicator.

DATA COLLECTION/EXTRACTION METHODS

Medicare Data on Provider Practice and Specialty identified POs billing Medicare; PECOS and IRS Form 990 identified health system affiliations. Beneficiaries age 18 and older were attributed to POs using a plurality visit rule.

PRINCIPAL FINDINGS

We observed total disparities in 12 of 36 comparisons between white and nonwhite beneficiaries; nonwhites received worse care in 10. Within-PO disparities exceeded between-PO disparities and were substantively important (>=5 percentage points or>=0.2 standardized differences) in nine of the 12 comparisons. Among these 12, nonaffiliated POs had smaller disparities than affiliated POs in two comparisons (P < .05): 1.6 percentage points smaller black-white disparities in follow-up after ED visits and 0.6 percentage points smaller Hispanic-white disparities in breast cancer screening.

CONCLUSIONS

We find no evidence that system-affiliated POs have smaller racial and ethnic disparities than nonaffiliated POs. Where differences existed, disparities were slightly larger in affiliated POs.

A systematic review of vertical integration and quality of care, efficiency, and patient-centered outcomes

BACKGROUND

Small independent practices are increasingly giving way to more complex affiliations between provider organizations and hospital systems. There are several ways in which vertically integrated health systems could improve quality and lower the costs of care. But there are also concerns that integrated systems may increase the price and costs of care without commensurate improvements in quality and outcomes.

PURPOSE

Despite a growing body of research on vertically integrated health systems, no systematic review that we know of compares vertically integrated health systems (defined as shared ownership or joint management of hospitals and physician practices) to nonintegrated hospitals or physician practices.

METHODS

We conducted a systematic search of the literature published from January 1996 to November 2016. We considered articles for review if they compared the performance of a vertically integrated health system and examined an outcome related to quality of care, efficiency, or patient-centered outcomes.

RESULTS

Database searches generated 7,559 articles, with 29 articles included in this review. Vertical integration was associated with better quality, often measured as optimal care for specific conditions, but showed either no differences or lower efficiency as measured by utilization, spending, and prices. Few studies evaluated a patient-centered outcome; among those, most examined mortality and did not identify any effects. Across domains, most studies were observational and did not address the issue of selection bias.

PRACTICE IMPLICATIONS

Recent evidence suggests the trend toward vertical integration will likely continue as providers respond to changing payment models and market factors. A growing body of research on comparative health system performance suggests that integration of physician practices with hospitals might not be enough to achieve higher-value care. More information is needed to identify the health system attributes that contribute to improved outcomes, as well as which policy levers can minimize anticompetitive effects and maximize the benefits of these affiliations.

The formation of physician patient sharing networks in medicare: Exploring the effect of hospital affiliation

This study explores the forces that drive the formation of physician patient sharing networks. In particular, I examine the degree to which hospital affiliation drives physicians' sharing of Medicare patients. Using a revealed preference framework where observed network links are taken to be pairwise stable, I estimate the physicians' pair-specific values using a tetrad maximum score estimator that is robust to the presence of unobserved physician specific characteristics. I also control for a number of potentially confounding patient sharing channels, such as (a) common physician group or hospital system affiliation, (b) physician homophily, (c) knowledge complementarity, (d) patient side considerations related to both geographic proximity and insurance network participation, and (e) spillover from other collaborations. Focusing on the Chicago hospital referral region, I find that shared hospital affiliation accounts for 36.5% of the average pair-specific utility from a link. Implications for reducing care fragmentation are discussed.

Understanding primary care-oncology relationships within a changing healthcare environment

Background

Management of care transitions from primary care into and out of oncology is critical for optimal care of cancer patients and cancer survivors. There is limited understanding of existing primary care-oncology relationships within the context of the changing health care environment.

Methods

Through a comparative case study of 14 innovative primary care practices throughout the United States (U.S.), we examined relationships between primary care and oncology settings to identify attributes contributing to strengthened relationships in diverse settings. Field researchers observed practices for 10–12 days, recording fieldnotes and conducting interviews. We created a reduced dataset of all text related to primary care-oncology relationships, and collaboratively identified patterns to characterize these relationships through an inductive “immersion/crystallization” analysis process.

Results

Nine of the 14 practices discussed having either formal or informal primary care-oncology relationships. Nearly all formal primary care-oncology relationships were embedded within healthcare systems. The majority of private, independent practices had more informal relationships between individual primary care physicians and specific oncologists. Practices with formal relationships noted health system infrastructure that facilitates transfer of patient information and timely referrals. Practices with informal relationships described shared commitment, trust, and rapport with specific oncologists. Regardless of relationship type, challenges reported by primary care settings included lack of clarity about roles and responsibilities during cancer treatment and beyond.

Conclusions

With the rapid transformation of U.S. healthcare towards system ownership of primary care practices, efforts are needed to integrate strengths of informal primary care-oncology relationships in addition to formal system driven relationships.

Disparities in Utilization of Medical Specialists for Colonoscopy

Purpose: Colonoscopy is the preferred screening modality for colorectal cancer (CRC) prevention. The quality of the procedure varies although medical specialists such as gastroenterologists and colorectal surgeons tend to have better outcomes. We aimed to determine whether there are demographic and clinical differences between those who received a colonoscopy from a specialist versus those who received a colonoscopy from a nonspecialist.

Methods: Using the population-based South Carolina Outpatient Ambulatory Surgery Database, we looked retrospectively to obtain patient-level endoscopy records from 2010 to 2014. We used multilevel logistic regression to model whether patients saw a specialist for their colonoscopy. The primary variables were patient race and insurance type, and an interaction by rurality was tested.

Results: Of the 392,285 patients included in the analysis, 81% saw a specialist for their colonoscopy. County of residence explained 30% of the variability in the outcome. Non-Hispanic black (OR=0.65; confidence interval [95% CI]: 0.64–0.67) and Hispanic patients (OR=0.75; 95% CI: 0.67–0.84) were significantly less likely than non-Hispanic white patients to see a specialist. Compared with commercial/HMO insurance, all other types were less likely to see a specialist, and even more so for rural patients. The interaction of race by rurality was not significant.

Conclusions: Specialists play a key role in CRC screening and can affect later downstream outcomes. This study has shown that ethnic minorities and adults with public or other insurance, particularly in rural areas, are most likely not to see a specialist. These results are consistent with disparities in CRC incidence, mortality, and survival.

Consolidation Trends In California's Health Care System: Impacts On ACA Premiums And Outpatient Visit Prices

California has heavily concentrated hospital, physician, and health insurance markets, but their current structure and functioning is not well understood. We assessed consolidation trends and performed an analysis of "hot spots"-markets that potentially warrant concern and scrutiny by regulators in terms of both horizontal concentration (such as hospital-hospital mergers) and vertical integration (hospitals' acquisition of physician practices). In 2016, seven counties were high on all six measures used in our hot-spot analysis (four horizontal concentration and two vertical integration measures), and five counties were high on five. The percentage of physicians in practices owned by a hospital increased from about 25 percent in 2010 to more than 40 percent in 2016. The estimated impact of the increase in vertical integration from 2013 to 2016 in highly concentrated hospital markets was found to be associated with a 12 percent increase in Marketplace premiums. For physician outpatient services, the increase in vertical integration was also associated with a 9 percent increase in specialist prices and a 5 percent increase in primary care prices. Legislative proposals, actions by the state's attorney general, and other regulatory changes are suggested.

Assessing Change in Physician Practice Organization Profile in South Carolina: A Longitudinal Study

BACKGROUND

Physician practice organization is shifting away from solo, independent practices toward direct employment, but trends for rural-urban differences are often analyzed by dichotomizing rurality. The purpose of this analysis was to examine trends in practice organization across 3 levels of rurality over a 21-year period in South Carolina.

METHODS

Physician license renewal forms were used to ascertain type of practice organization where physicians worked in South Carolina between 1995 and 2015. Physicians were divided into 4 categories: physicians in independent solo practices, physicians in independent group practices, employed physicians, and other. Historical trends in type of practice organization were evaluated for each level of rurality (metropolitan, micropolitan, and small adjacent/remote rural) using the National Cancer Institute's Joinpoint regression models.

RESULTS

There was a continual increase in physician renewals indicating employment, with an average annual increase of 5.9%. Micropolitan rural counties demonstrated the greatest average increase in license renewals for employed physicians (average annual increase = 7.4%; P < .05). The ratio of license renewals per 100,000 population for physicians in independent solo practices declined significantly over time. Micropolitan and small adjacent/remote rural counties saw an increase in the annual decline for this type of practice organization in 2007.

CONCLUSIONS

A shift toward physician employment was observed at all levels of rurality. Rural counties exhibited a more pronounced transition between the types of practice organization compared to metropolitan counties. Research is needed to address the implications of these changes for rural providers and patients.

Physician Market Structure, Patient Outcomes, and Spending: An Examination of Medicare Beneficiaries

OBJECTIVE

To understand the impact of changes in physician market structure on clinical outcomes and health care utilization.

DATA SOURCES

2005-2012 Medicare fee-for-service claims and enrollment data.

STUDY DESIGN

We consider the effect of cardiology market structure on utilization and health outcomes for four patient populations. We estimate the risk-adjusted impact of competition using multivariate regression models.

PRINCIPAL FINDINGS

The study finds that an increase in consolidation leads to statistically and economically significant increases in negative health outcomes. For example, we find that moving from a zip code at the 25th percentile of cardiology market concentration to one at the 75th percentile would be associated with 5 to 7 percent increases in risk-adjusted mortality for three of the sample populations. We also found higher expenditures in more concentrated markets. For example, moving from a zip code at the 25th percentile of cardiology market concentration to one at the 75th would be associated with 7 to 11 percent increases in expenditures, depending on sample population.

CONCLUSIONS

Our estimates indicate that increases in cardiology market concentration are associated with worse health outcomes and higher health care expenditures. Some effects may be attributed to vertical as well as horizontal changes.

Impact of the 340B Drug Pricing Program on Cancer Care Site and Spending in Medicare

OBJECTIVE

To examine the impact of the 340B drug discount program on the site of cancer drug administration and cancer care spending in Medicare.

DATA SOURCES/STUDY SETTING

2010-2013 Medicare claims data for a random sample of Medicare Fee-for-Service beneficiaries with cancer.

STUDY DESIGN

We identified the 340B effect using variation in the availability of 340B hospitals across markets. We considered beneficiaries from markets that newly gained a 340B hospital during the study period (new 340B markets) as the treatment group. Beneficiaries in markets with no 340B hospital were the control group. We used a difference-in-differences approach with market fixed effects.

DATA COLLECTION

Secondary data analysis.

PRINCIPAL FINDINGS

The probability of a patient receiving cancer drug administration in hospital outpatient departments (HOPDs) versus physician offices increased 7.8 percentage points more in new 340B markets than in markets with no 340B hospital. Per-patient spending on other cancer care increased $1,162 more in new 340B markets than in markets with no 340B hospital.

CONCLUSIONS

The 340B program shifted the site of cancer drug administration to HOPDs and increased spending on other cancer care. As the program expands, continuing assessment of its impact on service utilization and spending would be needed.

The impact of provider consolidation on physician prices

When a clinic system is acquired by an integrated delivery system (IDS), the ownership change includes both vertical integration with the hospital(s), and horizontal integration with the IDS's previously owned or "legacy" clinics, causing increased market concentration in physician services. Although there is a robust literature on the impact of hospital market concentration, the literature on physician market concentration is sparse. The objective of this study is to determine the impact on physician prices when two IDSs acquired three multispecialty clinic systems in Minneapolis-St Paul, Minnesota at the end of 2007, using commercial claims data from a large health plan (2006-2011). Using a difference-in-differences model and nonacquired clinics as controls, we found that four years after the acquisitions (2011), average physician price indices in the acquired clinic systems were 32-47% higher than expected in absence of the acquisitions. Average physician prices in the IDS legacy clinics were 14-20% higher in 2011 than expected. Procedure-specific prices for common office visit and inpatient procedures also increased following the acquisitions.

Vertical Integration of Hospitals and Physicians: Economic Theory and Empirical Evidence on Spending and Quality

Hospital–physician vertical integration is on the rise. While increased efficiencies may be possible, emerging research raises concerns about anticompetitive behavior, spending increases, and uncertain effects on quality. In this review, we bring together several of the key theories of vertical integration that exist in the neoclassical and institutional economics literatures and apply these theories to the hospital–physician relationship. We also conduct a literature review of the effects of vertical integration on prices, spending, and quality in the growing body of evidence ( n = 15) to evaluate which of these frameworks have the strongest empirical support. We find some support for vertical foreclosure as a framework for explaining the observed results. We suggest a conceptual model and identify directions for future research. Based on our analysis, we conclude that vertical integration poses a threat to the affordability of health services and merits special attention from policymakers and antitrust authorities.

Utilization Management in a Large Community Hospital

The utilization management of laboratory tests in a large community hospital is similar to academic and smaller community hospitals. There are numerous factors that influence laboratory utilization. Outside influences like hospitals buying physician practices, increasing numbers of hospitalists, and hospital consolidation will influence the number and complexity of the test menu that will need to be monitored for over and/or under utilization in the central laboratory and reference laboratory. CLIA’88 outlines the four test categories including point-of-care testing (waived) and provider-performed microscopy that need laboratory test utilization management. Incremental cost analysis is the most efficient method for evaluating utilization reduction cost savings. Economies of scale define reduced unit cost per test as test volume increases. Outreach programs in large community hospitals provide additional laboratory tests from non-patients in physician offices, nursing homes, and other hospitals. Disruptive innovations are changing the present paradigms in clinical diagnostics, like wearable sensors, MALDI-TOF, multiplex infectious disease panels, cell-free DNA, and others. Obsolete tests need to be universally defined and accepted by manufacturers, physicians, laboratories, and hospitals, to eliminate access to their reagents and testing platforms.