Organizational Factors Affecting the Successful Integration Between Physician Groups and Health Systems

Abstract

Amidst growing vertical integration, health care delivery is moving toward a state in which the lines of responsibility begin to blur. As health reform shifts the health care industry from volume to value, the market is calling for increased care coordination and management. This in turn calls for closer working relationships between physician groups and health systems, herein referred to as “physician-system integration.” Physician-system integration can be structured in a variety of ways, with the current trend shifting toward the most integrated structure, the employment model, in which physicians are employed by a hospital or health system and paid a salary. The evidence on the value of physician-system integration is mixed, however, putting into question the impact of current trends. This dissertation focused on the organizational factors affecting the success of integration between physician groups and health systems. The objectives of were two-fold: 1) to define what success means to different health systems, and 2) to answer the overarching research question: How is the success of an integrated delivery system affected by the degree and nature of physician-system integration? We applied a three-pronged approach – a systematic review with cluster analysis, qualitative interviews, and mixed methods – to collectively explain and predict the influence of physician integrating structures on the overall success of a health system. In Aim 1, we identified 29 empirical articles published in 2005-2016 that examined physician-system integration. Only 38% of the articles used organizational theory to guide their approach, which suggests an imbalance in past analyses and an underutilization of theory in integration research. Of the articles that did apply theory, bargaining-market power theory and transaction cost theory were the predominant ones used. We further identified 48 organizational factors that comprise the landscape of physician-system integration. In Aim 2, we interviewed 25 health executives across eight health systems in Washington State. Factors that made physician-system integration successful included: payment reform (how to compensate for care coordination activities), alignment between physician groups and hospitals (culture and leadership), and the establishment of more care coordination mechanisms (pre-service, point-of-service, and after-service). While all executives were proponents of increased integration, most stressed the importance of cultural and leadership alignment. We concluded that the landscape of physician-system integration is a complex array of 51 factors of the environment, physician group, hospital, care coordination, and integration success. In Aim 3, we found that tighter integration structures were associated with higher total facility expenses, with hospitals spending $675,000 to $833,000 for each “level” increase in integration. The trend was consistent with previous literature. However, we found that expenses were attenuated when care coordination mechanisms were considered as a mediator. This poses an opportunity for health systems to offset costs by strengthening care coordination. Executives were aware of integration costs and care coordination deficits but will continue to invest, seeking long-term reward. Through the three Aims, we put forth a theory-driven, practice-validated, and empirically-tested conceptual model – a tool for health executives, researchers, and instructors to more effectively address the complexities of integration. Our work indicates that physician-system integration is an amalgam of 52 factors of the internal and external environment. As trends continue to increase toward increased physician-system integration, our findings have the potential to inform regulatory policy on physician group and health system mergers and guide health systems in improving their performance and selecting their integration partners.