Managed Care and Physician/Hospital Integration

Abstract

Prologue:The authors set out in this study to find out whether the “enthusiasm and fanfare behind the integration movement” are actually being put into action in hospitals around the United States. What types of hospitals are most likely to integrate in any fashion with physicians? When hospitals and physicians do make formal arrangements, what level of risk and involvement are each assuming? The authors' analysis of nationally representative survey data points to telling differences in willingness to integrate depending on types of hospital, geographic location, and dependence on managed care revenue.Michael Morrisey is a professor and director of the Lister Hill Center for Health Policy at the University of Alabama at Birmingham (UAB). He holds a doctorate in economics from the University of Washington (Seattle). Jeffrey Alexander is the Richard Carl Jelinek Professor of Health Management and Policy and a faculty associate of the Survey Research Center at the University of Michigan School of Public Health. He received a doctorate in sociology from Stanford University and recently completed a study funded by the Agency for Health Care Policy and Research on rural hospital conversions. Lawton Burns, who holds a master of business administration degree in hospital administration and a doctorate in sociology from the University of Chicago, is an associate professor of health care systems at the Wharton School, University of Pennsylvania. Victoria Johnson is a research analyst at the University of Alabama at Tuscaloosa, and an adjunct professor at UAB, from which she received a doctorate in educational psychology/research. This paper examines the extent to which hospitals and physicians use new organizational structures designed to facilitate contracting with managed care firms and the extent to which this use is associated with managed care revenue. The data come from a nationally representative sample of 1,495 U.S. community hospitals responding to a 1993 survey about different organizational structures. The results indicate that only 23.3 percent of hospitals participate in at least one form. Hospitals with more than 15 percent of revenues from managed care are twice as likely to participate and favor forms that provide tighter linkages with physicians.