The swing of the market forces pendulum is toward the formation of single-specialty medical groups and away from multispecialty group practices, but the jury is out on whether the shift is a good thing for patients and the economy as a whole, according to researchers with the Center for Studying Health System Change (HSC).
Meanwhile, consumer choice is not driving the groups to improve quality, and very few payers have established financial incentives to drive it, the study authors wrote in an article, published in this month's Health Affairs.
"In theory, we're all for it, for being rewarded for improved quality," said Hoangmai Pham, M.D., an internist and study team member as senior health researcher at HSC. But in reality, Pham said, physicians are not being rewarded to invest in quality improvement efforts, nor do they see much of a payback in IT systems such as electronic medical records.
Further, "they certainly don't feel any pressure coming from consumers," she said.
Nevertheless, she said, "We definitely came across a small number of groups that were committed to quality improvement," including substantial investments in EMRs, and coordination of care programs.
"We don't know whether it's a good thing or a bad thing that these specialty groups are out there," Pham said. "It's a little bit early to tell."
With the rollback of capitation in most U.S. markets and the rise of preferred provider organizations as the structure of choice for most consumers and health plans, single-specialty groups, particularly in cardiology and orthopedics, have shifted from being cost centers under capitation to prime revenue generators under fee-for-service arrangements, even with discounts from a PPO.
The conclusion is based on analysis of more than 417 interviews with leaders of health plans, hospitals and physician groups in 12 metropolitan areas conducted between September 2002 and May 2003. The interviews were augmented by physician data drawn from the American Medical Association and the HSC's own surveys of 12,000 nonfederal U.S. physicians.
During the most recent round of leader interviews and interviews in 2000-2001, HSC researchers identified 55 specialist groups of 10 physicians or more in the 12 targeted areas, approximately half of which had been formed since 1996. Only one single-specialty group in the 12 target areas had disbanded since 1997. Cardiovascular groups were the most common at 17, followed by orthopedic (10) and neurology (six).
In comparison, during the previous three years, not one multispecialty group was formed in any of the 12 HSC study communities while several large and prominent groups splintered, according to the report.
Single-specialty groups formed for four reasons, the report said: 1) to amass scale and attract capital to invest in expensive equipment and facilities such as scanners and surgery centers; 2) achieve negotiating leverage with payers; 3) gain reputation as a high-quality group; and 4) afford professional management.
Survey respondents also said organizing around a single specialty avoided the managerial hassle of developing compensation arrangements for physicians with widely disparate revenue producing power, e.g., primary care physicians and surgeons.
What implications do these changes have for U.S. healthcare policy? Will the possible efficiencies derived from specialized "focused factories" outweigh the benefits of coordinated care that are the hallmark of the multispecialty approach? Will the current payment system fueling the growth of single-specialty groups also foster overutilization?
The authors do not jump to any conclusions.
"The simple response to this question is that we do not know nearly enough about the effects of large, single-specialty groups to provide and answer," the report said.
"If specialty groups can operate as focused factories . . . they could lower the overall cost of care through increased efficiency of operation" the report said, adding that researchers' visits "have provided little evidence that single-specialty groups, to date, are developing many of the organized quality-improving and cost-reducing processes to be expected of a focused factory."
According to Pham, the next couple of years should tell whether the trend toward single-specialty groups will have legs in the healthcare marketplace, particularly those with investments in facilities such as ambulatory surgery centers and specialty hospitals. Those investments are based on an array of financial and market assumptions that many not pan out, such as Medicare reimbursement rates remaining where they are now, or population and demand growth in a specific market.
"I think we'll know pretty soon whether this is speculative," Pham said.
Larry Casalino, assistant professor in the health studies department at the University of Chicago, and Gloria Bazzoli, professor of health administration at Virginia Commonwealth University in Richmond, also worked on the study.