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Viewpoint: One lesson about healthcare M&A from 1966 still rings true today

Despite efforts to better coordinate care through accountable care organizations and integrated delivery systems, studies indicate keeping distance between physicians and hospitals may actually be much more cost efficient, according to New York Times columnist Austin Frakt, PhD, a health economist and founder of the blog "The Incidental Economist."

In fact, Dr. Frakt found evidence against integrated delivery systems is so strong he wrote, "The lesson is simple: Coordinating your own care is still a good idea. Don't count on the health system to do it for you." In coming to this conclusion Dr. Frakt cited a host of studies that found integrated delivery systems — like Rochester, Minn.-based Mayo Clinic or Danville, Pa.-based Geisinger Health System, for example — did not provide meaningfully better quality of care, and often did it at a higher cost. Other studies found minor improvements in quality, such as increased screenings, but still found higher costs were associated to larger healthcare networks or hospital-owned physician practices.

Studies of ACOs cited by Dr. Frakt indicated ACOs do not reduce costs once bonus payments are factored in — except for ACOs led by independent primary care physicians. This fact — that bigger isn't always better in healthcare — is an idea that dates back to 1966, according to Dr. Frakt.

He said this idea comes from Avedis Donabedian, MD, a researcher from Ann Arbor-based University of Michigan, who found that the way healthcare delivery is organized has little correlation to patient outcomes.

"As anyone who has worked in a large company or has managed a large group knows, the more people involved, the harder it is to coordinate activities," Dr. Frakt wrote.


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