The Role of Physician Integration in Alternative Payment Models: The Case of the Comprehensive Joint Replacement Program

53 Pages Posted: 14 Sep 2022

See all articles by Christopher Chen

Christopher Chen

Indiana University - Kelley School of Business

Kraig Delana

IE Business School

Date Written: August 20, 2022

Abstract

In the U.S., physicians are increasingly integrating horizontally as well as vertically, while payment models are simultaneously transitioning away from fee-for-service towards alternative payment models (APM). While both are known to alter providers' financial incentives and affect cost and quality individually, their interactions have potential consequences for regulation of provider integration and APM design and evaluation. In this paper, we empirically examine the role of both horizontal and vertical integration of orthopaedic surgeons in driving heterogeneity in the impact of the Comprehensive Joint Replacement (CJR) alternative payment program. Using a quasi-experimental difference-in-difference-in-differences approach, we find CJR hospitals with high horizontal and vertical integration see an increase in both hospital costs and risk-adjusted complication rates of 3.17% & 1.18, respectively, while others see either a decrease or no change in these measures. Moreover, we present evidence showing integration affects physician care decisions regarding length-of-stay and discharge disposition that explain the changes in costs and quality. Our findings provide novel insights into provider integration and clinical decisions that are relevant for policymakers, payors, and healthcare providers.

Note:
Funding Information: None.

Conflict of Interests: None.

Keywords: alternative payment models, physician integration, healthcare operations, empirical healthcare

Suggested Citation

Chen, Christopher and Delana, Kraig, The Role of Physician Integration in Alternative Payment Models: The Case of the Comprehensive Joint Replacement Program (August 20, 2022). Available at SSRN: https://ssrn.com/abstract=4195640 or http://dx.doi.org/10.2139/ssrn.4195640

Christopher Chen

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Indianapolis, IN 47405-1701
United States

Kraig Delana (Contact Author)

IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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