A more complete measure of vertical integration between physicians and hospitals

Abstract

Objective

To develop an accurate and reproducible measure of vertical integration between physicians and hospitals (defined as hospital or health system employment of physicians), which can be used to assess the impact of integration on healthcare quality and spending.

Data Sources and Study Setting

We use multiple data sources including from the Internal Revenue Service, the Centers for Medicare and Medicaid Services, and others to determine the Tax Identification Numbers (TINs) that hospitals and physicians use to bill Medicare for services, and link physician billing TINs to hospital-related TINs.

Study Design

We developed a new measure of vertical integration, based on the TINs that hospitals and physicians use to bill Medicare, using a broad set of sources for hospital-related TINs. We considered physicians as hospital-employed if they bill Medicare primarily or exclusively using hospital-related TINs. We assessed integration status for all physicians who billed Medicare from 1999 to 2019. We compared this measure with others used in the existing literature. We conducted a simulation study which highlights the importance of accurately identifying integrated physicians when study the effects of integration.

Data Collection/Extraction Methods

We extracted physician and hospital-related TINs from multiple sources, emphasizing specificity (a small proportion of nonintegrated physicians identified as integrated).

Principal Findings

We identified 12,269 hospital-related TINs, used for billing by 546,775 physicians. We estimate that the percentage of integrated physicians rose from 19% in 1999 to 43% in 2019. Our approach identifies many additional physician practices as integrated; a simpler TIN measure, comparable with prior work, identifies only 30% (3877) of the TINs we identify. A service location measure, used in prior work, has both many false positives and false negatives.

Conclusion

We developed a new measure of hospital-physician integration. This measure is reproducible and identifies many additional physician practices as integrated.