Chief Executive Officer, Cardiology Associates of Mobile, Inc.

Dissertation Title

Hospital-physician vertical integration: The effect of integration on cardiology compensation and clinical productivity

Dissertation Abstract

U.S. hospitals have begun responding to health care reform and the Affordable Care Act (ACA) of 2010 by accelerating alignment with physicians. Hospital-physician vertical integration has increased considerably in the last decade. For providers, consolidation has the potential to produce economies of scale and reduced costs. For patients, integrated networks have the potential to deliver better coordinated care and improve quality. However, the current integration movement has not been compelled by clear objectives. The goals of reducing costs and improving quality have not panned out, at least not yet.

Cardiologists have increasingly been targets for integration. More than half of the cardiologists in the U.S. are now employed by hospitals. Recent data indicate that the compensation for integrated or employed cardiologists is considerably higher than for independent cardiologists, yet their clinical productivity, measured by work RVUs is lower.

A quantitative, retrospective, longitudinal analysis, comparing the compensation and work RVUs of integrated cardiologists to the compensation and work RVUs of cardiologists that have remained independent, was conducted. The study was to evaluate whether there was a difference in the compensation and work RVUs between integrated or employed cardiologists and their independent colleagues and whether integration of cardiologists was associated with higher compensation and lower clinical productivity measured by work RVUs.

Data from the MedAxiom Annual Survey from 2010 to 2014, including data on compensation, work RVUs, ownership model (i.e. integrated or independent), and other relevant variables, were used in the analysis. MedAxiom represents approximately 320 cardiology groups with more than 6,700 physicians.

Results indicate a significant difference in compensation between integrated cardiologists and independent cardiologists. Integrated cardiologists, when considering other factors that might influence compensation, earn significantly more than their independent counterparts. As for clinical productivity measured by work RVUs, integrated cardiologists, when considering other factors that might influence clinical productivity, produce significantly fewer work RVUs than do independent cardiologists. There are number of implications for researchers, policy makers, and healthcare administrators regarding the results of this study. Although the potential exists for benefits from vertical integration, they may be accompanied by unintended consequences.