Associations between physician-hospital integration and U.S. acute care hospital financial performance.

Abstract

Background: Physician-hospital integration (PHI) is a popular strategy for enhancing the relationship between hospitals and physicians to thereby improve hospital performance, including financial viability.

Purpose: Using a new objective-oriented PHI categorization, this study aimed to assess how both hospital-and system-level financial, clinical, and financial/clinical hybrid PHIs were associated with U.S. acute care hospitals' financial performance.

Methodology/approach: We conducted a cross-sectional study using secondary data from six sources to assess the impact of hospital- and system-level PHI on hospital financial performance. We employed multiple linear regression to analyze the relationships between PHIs and hospital operating margin, total margin, and salaries to net patient revenue, separately.

Results: Hospital-level financial PHIs were associated with higher salaries to net patient revenue (considered a negative financial outcome), whereas system-level financial PHIs were associated with higher operating margin, higher total margin, and lower salaries to net patient revenue (indicating higher revenue generation efficiency). System-level clinical PHIs were associated with higher salaries to net patient revenue. Financial/clinical hybrid PHI showed mixed outcomes.

Conclusion: Our study suggests that system-level financial PHI and financial/clinical hybrid PHI may improve hospital financial performance, whereas system-level clinical PHIs have some negative financial effects.

Practice implications: Our findings imply the value of examining the effects of PHI categorized in terms of the benefits of contractual structures to align financial goals with physicians. Although hospital executives may have limited control over system-level PHI, it may also be beneficial to anticipate the outcomes of system-level PHI for their facilities' performance.