Hospital Employment of Physicians: Changing Referral Patterns?

In recent years, U. S. hospitals have accelerated the trend toward acquisition of physician practices.  When the acquisition is made by a hospital-owned integrated delivery system (IDS), this pattern of acquisitions causes both vertical integration with the acquiring hospital system, and also horizontal acquisition with the pre-existing clinics systems in the IDS.  Theoretical and qualitative work in this area suggest that these acquisitions will result in referral patterns concentrated within the acquiring IDS, however there is limited empirical work exploring the impact of acquisitions on referral patterns.

 This study leverages changes in a large metropolitan area, in which three multispecialty clinic systems were acquired by hospital-owned integrated delivery systems at the end of 2007.  Using a longitudinal dataset covering two years prior to the acquisitions and four years following the acquisitions, we examine the referral patterns of patients attributed to the acquired clinic systems, compared with a variety of control clinic systems.  We examine inpatient referral patterns and patterns of referrals for CT scans and MRIs.  In addition, because referrals may change the location of outpatient services from clinic settings to ambulatory care centers or outpatient hospital settings where facility fees may be charged, we look for evidence of increasing probability of facility fees being charged for outpatient services.

 We find evidence of changing inpatient and imaging referrals when the clinic system was acquired by an IDS that was not historically used by acquiring physicians.  In addition, we find an increased probability that a facility fee will be charged, driven primarily by shifts in the location of preventive screening for breast and colon cancer, with associated pathology of biopsies also having an increased probability of a facility fee.